Friday, March 22, 2013

More Tax Reform in the Wings?

There has not been a thorough reform of the tax code since 1986, and there probably won’t be anything comprehensive in the near future given the current divisions in Congress. That said, the Senate Finance Committee is beginning to look at some possible changes to the tax code and a tax reform bill will likely be introduced sometime this year. 

Some of the issues which are expected to be addressed include:
·         The Tax Gap – Every year, several billion dollars in taxes owed to the government are not collected. Congress will definitely want to look at how to reduce the size of this gap.
·         The Alternative Minimum Tax – This has been a real problem for many taxpayers, including lower income taxpayers, as it forces them to pay higher levels of tax. Congress will look at eliminating both the Individual and Corporate Alternative Minimum Tax systems.

·         Limiting Exemptions and Itemized Deductions for High Income Earners – In order to move the tax burden increasingly toward the higher income earners, Congress will consider phasing out many of the current exemptions and itemized deductions for individuals earning more than $250,000 and for couples earning more than $300,000. 

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