Friday, January 29, 2010

This Week's State of the Union: A Tax Perspective

A variety of tax proposals were included in President Obama's State of the Union speech. The credit for hiring workers was mentioned by both Tom Ochsenschager (hereafter TO) of the AICPA, who believed that it would allow employers to avoid the employer share of Social Security and Dean Zerbe of alliantgroup, who feared that the ending bill might create enough regulatory promises to counterbalance the tax relief. TO also mentioned the college credit (Hope? Lifetime Learning?) scheduled to end in 2010 and the changes in rate and qualifying income level for the child care credit. Zerbe also believed that Obama's failure to mention the estate tax indicates that legislation on this tax could get very sticky this year. Finally, Lewis Taub of RSM McGladrey noted the extension of immediate write-offs of certain property and equipement and believed that Obama wanted a return to 20% tax rates on capital gains and dividends and a max 39.6% tax rate for high income individuals.

While tax issues clearly were not emphasized in this past week's State of the Union, it is interesting to see what tax issues were mentioned or inferred. While the health care program related taxes are on at least temporary hiatus; I suspect that some (though probably not major) tax law adjustments will come before 2010 Election Day.

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