President’s Tax Proposals

As part of President Obama’s 2014 budget, there are proposals to increase federal taxes and fees by more than $1 trillion over 10 years. The increases would result from:

• Capping all itemized deductions so that the overall reduction by claiming these write-offs would be limited to 28% of income. This change is aimed at the top 3% of taxpayers.
• Adopting the “Buffett rule” (named after billionaire Warren Buffett) requiring millionaires to pay at least 30% of their income (after charitable deductions) in taxes. This change is aimed at the top 1% of taxpayers.
• Changing the method for making annual inflation adjustments to tax brackets, which would have the effect of increasing taxes. This change would affect all taxpayers.
• Raising the federal cigarette tax to 94 cents per pack.
• Reverting to 2009 rules for estate and gift taxes (which would subject smaller estates to tax than is currently required).

These are only proposals. Tax changes will come only when there is consensus in Congress.

Source: CCH report