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.
- Long Term Care Insurance: Premiums While premiums for qualified long-term-care insurance may be deductible as medical expenses there are exceptions to this general rule. Learn how to avoid unnecessary tax liabilities.
“Nothing is certain except death and baldness.” The tweak of Ben Franklin’s famous observation isn’t ours, rather Sir Sean Connery’s as a response to whether or not he was a shoo-in for the Academy Award for “The Untouchables.” It’s April, so we’ll add taxes back in.
An interesting dichotomy is shaping up for 2012. The president has indicated he wants to raise taxes at the federal level for wealthy individuals. Possibly in anticipation of such a move, states are introducing legislation to counteract or at least blunt the president’s intended impact. A cursory glance at The Tax Foundation’s tax policy blog provides examples.
The Indiana legislature recently approved a plan to eliminate that most controversial of controversial taxes, the one on inheritances. If Gov. Mitch Daniels signs the bill, S.B. 293, the tax will be gradually phased down and finally eliminated in 2021.
“In addition to the phase-down, the exemption level is immediately increased from $100,000 to $250,000,” according to authors Mark Robyn and Jordan King.
On March 9, the Florida senate unanimously voted to put personal property tax cuts on the ballot. H.J.R. 1003 will raise the state’s personal property tax exemption from $25,000 to $50,000.
“Raising the exemption from $25,000 to $50,000 would mean that nearly half of current TPP tax filers will no longer be required to file this cumbersome and distortionary tax,” according to the Foundation’s Scott Drenkard.
Lastly, Idaho is considering a requirement that any tax and fee increase be subject to a super-majority.
“Requiring a higher threshold for taxes has historically been justified on similar grounds as for other subject matters subject to super-majority requirements,” such as impeachments and removals from office, Joseph Henchman writes.
Despite the high-profile nature of the presidential election, Washington Post columnist George Will recently wrote, this year’s election contest should focus on state and local levels, as this is where the real battle will be fought. Judging from the tax measures already proposed, I’m inclined to agree. Winning the battle on the state and local level will take some of the sting out of this year’s annual April tax hit.