Practical IRS Tax Insights – September 2019 Newsletter
FYI – I continue to post many videos on various topics. To access them log in to my LinkedIn account HERE.
Remember – If you filed for a tax return extension, corporate tax returns are due 9/15 and personal returns are due 10/15.
Tonight is the Democratic Debate and most probably taxes will be a part of the discussion. Here is some information about possible Democratic tax implications:
“How best to tax the rich is up for debate among the contenders who will be on stage that night. Raising the top income tax rate is one way. Joe Biden and Amy Klobuchar want to raise the rate from 37% to 39.6%, which was the rate before 2018. Bernie Sanders is calling for a 70% tax rate on income over $10 million. Others are in between or haven’t committed to a top tax rate yet.
A “wealth tax” is another idea. Elizabeth Warren was the first candidate to issue a wealth tax proposal. Under her plan, an annual 2% tax would be imposed on net worth above $50 million, rising to 3% on net worth in excess of $1 billion. Pete Buttigieg and a few other candidates have also expressed support for a wealth tax. Higher estate taxes are on many candidates’ wish lists. For 2019, only estates worth more than $11.4 million…$22.8 million for couples if portability is timely elected on Form 706 for the first-to-die spouse…pay the 40% estate tax. If Sanders had his way, he’d lower the exemption to $3.5 million and hike rates incrementally from 45% to 55%, based on the estate’s size, except that estates of billionaires would get a 77% rate. Cory Booker, Buttigieg, Warren and others prefer readopting the estate tax rates and the exemption amount from 2009…a 45% top rate with a $3.5-million exemption. The top candidates have a few other ways to tax inherited wealth. Julián Castro wants to impose federal income and payroll taxes on inherited wealth of $2 million or more. Biden, Booker, Castro and Beto O’Rourke have publicly called for doing away with the stepped-up basis given to property received from a decedent.
Increasing taxes on capital gains is also popular among the candidates. Most of them have come out in favor of taxing capital gains in the same manner as ordinary income or simply raising the rates on capital gains. For anyone making over $1 million, Biden would double the capital gains tax. Castro and Klobuchar want to increase the capital gains tax for Americans earning more than $400,000 per year. Financial transaction taxes are on some wish lists, too. Kamala Harris calls for tax rates of 0.2% for stock, 0.1% for bond and 0.002% for derivative trades. Sanders offers a similar plan. O’Rourke and Andrew Yang want a 0.1% tax on all trades. Hiking the wage base for the Social Security payroll tax has been suggested. For 2019, wages above $132,900 are not subject to the tax. Klobuchar and Sanders would extend Social Security tax to wages over $250,000. O’Rourke would extend it to wages above $400,000. Biden, Harris and others support comparable changes.”
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