While Congress has slapped a band-aid on the ‘fiscal cliff’, much of what CCH discusses here Congress has yet to act upon. Do realize that the band-aid provided by Congress permits $1 tax reduction for every $42 tax dollars raised. Will Rogers must be rolling over in his grave with laughter.
CCH Outlines Options as Congress, Taxpayers Face Fiscal Cliff
CCH Offers Scenario for What Different Proposals Would Mean for a Middle-income Married Couple
RIVERWOODS, Ill., Dec. 26, 2012 /PRNewswire/ — Congress returned to session on Thursday, 27-December, to complete work for the year, which is hoped to include a deal to avert the December 31 “fiscal cliff” deadline.
But, Congress will need to work quickly to do so – or come to some interim agreement, according to CCH, a Wolters Kluwer business and leading global provider of tax, accounting and audit information, software and services (CCHGroup.com).
“While a deal looked close on several occasions during negotiations, it’s been elusive so far,” said George Jones, JD, CCH Senior Federal Tax Analyst.
“Whether a resolution can be reached before Congress recesses for the year grows dimmer as the days progress.”
The fiscal cliff, shorthand for January 1, 2013, when the terms of the Budget Control Act of 2011 are scheduled to go into effect, includes a series of across-the-board spending cuts and tax increases.
According to CCH, three scenarios that could transpire over the next few days include…
A full resolution is reached
“Last week it seemed President Obama and House Speaker Boehner were circling in on a middle ground, but that fell apart and it’s not clear they will be able to return to those positions to resume negotiations this week,” said Jones.
The president had mentioned being open to a $400,000 threshold on income tax rates at one point.
An agreement “in principle” with details worked out in 2013
“They could pass legislation establishing a framework of general tax increases and/or spending cuts and allow the new Congress to work out the details early next year.”
No agreement is reached and the Bush-era tax cuts fully expire
“Even if we go over the fiscal cliff, Congress could act early next year to reach a compromise and make any agreement retroactive to the beginning of the year,” said Jones.
“However, this would not be the ideal scenario for most taxpayers, businesses or investors – most of whom would prefer some degree of certainty heading into 2013.”
Tax Outcomes for Middle-class Couple
The free CCH 2013 Fiscal Cliff Estimator (CCHGroup.com/Estimator), allows individuals and tax advisors to compare a taxpayer’s 2012 tax liability against the two proposals as well as what would happen if Congress does not act.
|Current 2012 tax rates||Full-extension of Bush-era tax cuts (Republican Plan)||Presidential and Senate Democratic proposal||Fiscal Cliff (if Congress does not act)|
|Income tax rate||28%||28%||28%*||31%|
|Estimated Income tax (incl dividends, capital gains)||$30,229||$29,916||$29,465 (NOT including capital gains and dividends)||$34,891|
|Long-term capital gains||15%||15%
(plus 3.8% Medicare Tax on Net Investment Income for some taxpayers)
$375 (plus 3.8% Medicare Tax on Net Investment Income for some taxpayers)
(plus 3.8% Medicare Tax on Net Investment Income for some taxpayers)
$75 (taxed as capital gains except in excess of the higher income AGI cutoffs, when dividends are taxed as ordinary income)
|Personal exemption||$3,800||$3,900 (personal exemption phase-out assumed to be extended)||Proposed to allow the temporary repeal of the personal exemption phase-out to expire||$3,900 (total exemptions that may be claimed by a taxpayer are reduced by 2% for each $2,500, or portion thereof by which the taxpayer’s AGI exceeds the applicable threshold)|
|AMT patch||Yes||Yes||Supported||None. 20 million additional families estimated to be subject to AMT|
|Payroll tax cut||Not included in Bush-era tax cuts. Social Security rate increases to 6.2% for employees; maximum increase is $2,274||Not discussed. Social Security rate increases to 6.2% for employees; maximum increase is $2,274||Not extended. Rate increases to 6.2% for employees; maximum increase is $2,274|
Source: CCH Fiscal Cliff Estimator.
* The tax is estimated based on taxable income. The President’s proposal is based on Adjusted Gross Income (AGI), not taxable income. Taxable income is determined by subtracting personal exemptions and either the standard deduction or itemized deductions (among other items) from AGI. Rates could differ slightly based on this differentiation.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading global provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading solutions are The ProSystem fx® Suite, CorpSystem®, CCH® IntelliConnect®, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill. Follow us now on Twitter @CCHMediaHelp. Wolters Kluwer (www.wolterskluwer.com) is a market-leading global information services company. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.
SOURCE CCH, a Wolters Kluwer business
CCH will issue a Tax Briefing when a bill is produced. To obtain the Tax Briefing or to speak with a CCH tax analyst, please contact Eric Scott, 847-267-2179, [email protected] or Leslie Bonacum, 847-267-7153, [email protected].
Eric Scott, +1-847-267-2179, [email protected]
Leslie Bonacum, +1-847-267-7153, [email protected]
Web Site : http://www.wolterskluwer.com
What Are Your Thoughts??
What has CCH not covered?
Are you receiving any tax advice contrary to CCH?
Who is providing you the best tax advice?
Please share your thoughts in our comments section below! (note: all commments are only comments and not legal advice, please consult your own accountant and/or attorney for final advice)
Short URL for This Content
Author Bio and Latest Posts
Press Releases are broadcasted by The HRIS World from various resources as well as individual requests.
We feature press releases that have a high relevancy and importance to our audience.
Our audience are professionals in Cloud, ERP, HRIS, HR Tech, Project Management, Recruiting, HR, and C-level Executives who live and work in 90+ countries.
We can provide your press release to our focused audience of 50,000+ a month for a flat fee of $45.
As we have several revenue streams available to us, we can afford to offer this low price to bring your press release to a focused group.
For further information, contact us at by social media or via email by clicking your choice below...
Latest posts by Press Releases (see all)
- Convention: The Untapped Economic Power of Business Women in the Arab World - Sun, 16-Nov-2014
- New International Convention for Business Women to Teach Brand Value - Thu, 6-Nov-2014
- HR Department Benchmarks and Analysis™ 2014-2015 - Tue, 14-Oct-2014
- Selecting the Right HR Software - Wed, 30-Jul-2014
- New Site for Nortek People Management Software - Wed, 23-Jul-2014