The Bush income and estate tax cuts of 2001 are set to expire in three months, and Robert DiQuollo, president of the boutique advisory firm Brinton Eaton, is more than a little concerned about congressional inaction in the run-up to November midterm elections.
“If the Bush tax cuts of 2001 are not extended, we will witness one of the largest tax increases in history,” DiQuollo said in a commentary released by Brinton Eaton on Friday.
Nine years ago, Congress passed several income and estate tax reductions through a “reconciliation” process that resulted in their being sunsetted after 2010.The commentary noted that, absent congressional action, marginal income tax rates for the top fifth and top income brackets would increase to 36% and 39.6%, respectively, from the current rates of 33% and 35%. Net capital gains rates for these two brackets would go up to 20% from 15%.
The biggest change, however, would come in the qualified dividend area, which would increase from 15% to a maximum of 39.6% if Congress did not extend the cuts, according to the commentary. Moreover, tax rates for 2013 when the new health care laws are effective would impose an additional 3.8% tax on individual taxpayers whose modified adjusted gross income exceeds $200,000, or $250,000 for married couples filing joint returns.