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With a new president to be elected in November, both businesses and individuals alike are beginning to focus more on the impact each presidential candidates' proposed tax policies will have on the taxes they pay. As would be expected, significant differences can be seen in the preliminary analysis of the tax proposals of Senator Obama and Senator McCain and their resulting impacts. Under the candidates' proposed policies, the top marginal rates vary significantly. Senator Obama is proposing a maximum individual rate of 39.6% and a maximum corporate rate of 35%, while Senator McCain's corresponding proposal would have the maximum individual rate at 35% and corporate rate at 25%. There are some similarities in the plans presented to date. The candidates agree that: 4 The number of taxpayers affected by alternative minimum tax should be limited, but the tax should not be repealed. 4 The estate tax should be reduced but not repealed. 4 The research credit should be made permanent. 4 Portions of previous tax cuts affecting those with income below $250,000 should be made permanent. In addition to the tax rates noted above, there are several areas where the candidates' goals vary greatly. Senator Barack Obama proposes: 4 Cuts for everyone except those making greater than approximately $250,000. 4 Increase in capital gains tax rate and dividend tax rate. 4 Expanded earned income credit. 4 Exemptions for lower earning seniors. 4 Higher payroll taxes for wage-earners making more than $250,000. Senator John McCain proposes: 4 Double exemptions for dependents. 4 More generous expensing rules for businesses. 4 Repeal of domestic production activities deduction. Some of
the tax policies of both Senators Obama and McCain would be phased
in gradually over time. However, some of the new policies would be
felt immediately, such as the new individual income tax rates. The Somerset Tax Team will continue analyzing the proposed tax policy information as it evolves and the election nears. We will keep you informed with matters that may impact you. Please don't hesitate to contact us if you would like to discuss this topic at any time.
Tax Times is provided by Somerset CPAs for our clients and other interested persons upon request. Since technical information is presented in generalized fashion, no final conclusion on these topics should be made without further review. For additional information on the issues discussed, please contact your Somerset advisor or a member of our Tax Team. This document is not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer.
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Somerset CPAs, P.C. |
