A tough time to be rich
Thursday, November 07, 2013 2:24 PM
Congressional Democrats are targeting millionaires who claim income as business profits to avoid payroll taxes, Bloomberg reported.
A list of tax breaks obtained by Bloomberg shows that limiting the ability of some business owners to use the S corporation structure would save $12 billion over the next 10 years. Democrats are calling it the "John Edwards/Newt Gingrich loophole," as both men used the provision to avoid payroll levies, according to tax returns filed during the 2012 and 2004 presidential campaigns.
Higher tax rates passed by Congress this year have some high earners facing headaches they weren't anticipating, according to another Bloomberg article.
High earners are seeing a combination of federal tax increases this year, including a top marginal rate of 39.6 percent, up from 35 percent, and a 20 percent tax on long-term capital gains and dividends, up from 15 percent.
Some top earners have been paying quarterly estimated taxes based on their liability for 2012, and have been late to realize how much more they will owe by April 15.
This CNNMoney article points out that average income for the bottom 90 percent of American families has fallen 1.2 percent since 1983. At the same time, incomes for the top 1 percent have increased 145 percent.
Some reasons, the article states: globalization, a winner-take-all environment in businesses and lower tax burdens than existed before the 1980s.