President Obama: Is This The Angel Of Death Or Robin Hood?

Last night… President Obama has unveiled his tax proposal in the State of the Union Message. In preparation for the conversations that I maybe having with you, my clients, I called one of the partners at RBZ Accounting and Consulting to ask the question, what does this mean to me, my clients and Real Estate. Here is the response:

“As you noted and to answer your question: President Obama unveiled his tax proposal in Tuesday’s State of the Union address – and it has been called many different names.

The Wall Street Journal is calling it a tax hike proposal whereas, the New York Times is calling it a tax cut proposal. It has also been labeled both a “Robin Hood” tax and an “Angel of Death” tax. All of these labels are applied to the same set of facts but are interpreted through different filtering lenses.

Like any proposal of this nature, the devil is the details, and details are what we don’t have at this time. Hence, at this point, we will not be able to answer the question, “If this passes, how will it affect me?” However, we have summarized what is currently on the table:  How money would be raised and the money would be spent”.

How money would be raised:

  1. Capital gains tax for couples with annual incomes in excess of $500,000 would be raised to 28% from the current 20%.
  2. The step up in basis will be eliminated for the heirs of “large” estates. Currently the basis of the inherited assets is adjusted to their FMV at the time of inheritance. It is not quite clear what constitutes a “large” estate.
  3. Large financial institutions will be subject to a new tax that is based on their liabilities. This new proposal will affect the banks that have assets of $50 billion or more.

How the money would be spent:

  1. Earned income tax credit is proposed to be broadened not include families without children and noncustodial parents.
  2. Triple the amount of maximum tax credits to $3,000 for childcare for low and middle income taxpayers for children under the age of five years.
  3. $500 tax credit for married couples that both hold jobs. The credit is proposed to apply to families with annual income of up to $210,000.
  4. Simplify and consolidate six education tax breaks into two.
  5. Stimulate retirement savings by automatically enrolling people who don’t have access to an employer retirement plan in an IRA and expand access to employer sponsored plans for certain part time employees.

Salee Zawerbek, Your Personal Real Estate Consultant For LIFE!

SOURCE: CB- G.BINGHAM

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