To Change or Not To Change.

June 25, 2012 — 1 Comment

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Election season is under way; one issue that is at the forefront of both Mitt Romney and President Obama’s campaign is how to manage the end of the Bush tax cuts.  It’s also no secret that potentially bigger tax bills for the wealthy is the sticking point in the current national battle over what’s to become of U.S. individual rates in 2013.

The Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ) looked at the Republicans’ and Obama’s plans for the Bush tax cuts, the moniker that’s still sticking to the variety of tax reductions enacted by President Bush in 2001 and 2003 that had been extended by Obama extended in 2010 through the end of this year.

Essentially, the GOP wants to keep everything as is. Obama would continue some of the cuts, but wants the income tax rate to be higher for married couples making $250,000 a year ($200,000 annually for single filers).

Tax cut plans’ state-by-state effects: In addition to coming up with the 1.9 percent national average of folks who would see higher tax bills under the Obama plan, the two Washington, D.C.-based tax policy research groups also analyzed the effects on taxpayers in every state and the nation’s capital.

Taking the biggest tax cut hits: Which states’ taxpayers would see the biggest tax bills under Obama’s plan? As expected, that would happen in states with large higher income populations, but the order of the locales might surprise you.

The states in which more than 1.9 percent of their residents would lose some of their current tax cuts are:

  • District of Columbia, 4 percent
  • Connecticut, 3.6 percent
  • New Jersey, 3.2 percent
  • Massachusetts, 2.8 percent
  • New York, 2.6 percent
  • Illinois, 2.4 percent
  • New Hampshire, 2.4 percent
  • Virginia, 2.4 percent
  • California, 2.3 percent
  • Maryland, 2.3 percent
  • Washington, 2.3 percent
  • Texas, 2.3 percent
  • Colorado, 2.2 percent
  • Florida, 2.2 percent
  • Alaska, 2.0 percent
  • Nevada, 2.0 percent
  • Wyoming, 2.0 percent

And the states where residents wouldn’t see that much difference in the two tax plans? Only 0.9 percent of West Virginians and just 0.8 percent of Mississippi residents would lose any tax breaks under Obama.

Check out how you and your neighbors would fare under each scenario at CTJ’s interactive tax plan comparison map.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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  1. To Change or Not To Change. | The Joy of Tax Law | Tax Attorney - June 26, 2012

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