More On Tax Planningfrom The Advisor's Professional Library
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- Cafeteria Plans The income tax treatment of cafeteria plans is key to their popularity. Learn how to maximize the tax benefits of these “flexible benefit plans”.
House Budget Committee Chairman Paul Ryan, R-Wis., released the House GOP’s 2013 budget on Tuesday, which lowers tax rates, ends the Alternative Minimum Tax and consolidates the current six individual income brackets into two brackets of 10% and 25%.
Ryan’s budget proposal would also shift from a “worldwide” to a “territorial” tax system that House Ways and Means Committee Chairman Dave Camp, R-Mich., says “puts American companies and their workers on a level playing field with foreign competitors and encourages investment and hiring in the United States.”
Ryan (left) told The Wall Street Journal that while he doesn’t expect the bill “to make law this year,” House GOP members do “expect to give the country an alternative choice for the future. We’re going into this election with a specific plan and showing how we could realize it and get it done.”
Like President Obama’s budget proposal, the GOP plan would cut the corporate tax rate from 35% to 28%.
Other key changes in the GOP budget proposal, The Path to Prosperity, which adopts the tax-writing Ways and Means Committee recommendations, would also repeal President Obama’s health care law, eventually eliminate Fannie Mae and Freddie Mac, and turn Medicaid into a block-grant program.
Democrats immediately derided the GOP proposal. The Ways and Means Committee's ranking Democrat, Rep. Sandy Levin of Michigan, said that the GOP proposal on taxes was "a dangerous dodge, with only one thing clear: It would end up showering benefits on the very wealthy and soaking the middle class.”
Levin said, “The only way to cut the top tax rate to 25% is to essentially end the tax deductions for health care coverage, mortgage interest expenses and charitable contributions, even as Republicans would keep the temporary lower rates for capital gains and dividends that mainly benefit very high-income taxpayers.”
House Democratic Whip Steny Hoyer, D-Md., said the Republican budget was "a repeat of last year’s budget: it once again ends the Medicare guarantee while protecting tax cuts for the wealthy.”
Hoyer said the plan “slashes investments in innovation, education and infrastructure, which puts our economic recovery at risk and threatens American jobs. It does not reduce the deficit in a responsible way, instead placing the burden of deficit reduction onto seniors, the middle class, working families and the most vulnerable by refusing to ask the wealthiest among us to contribute.”