Taxes will go up no matter whatPublished 5:50am Sunday, November 4, 2012
Your income taxes are going up!
I have been active in the income tax business for about 20 years. Over that time I have seen many changes to our tax laws. I have personally prepared many tax returns for low-, middle- and high-income taxpayers. I am writing to call attention to our current income tax laws that will be expiring or changing at the end of this year. Unless our elected officials do something for 2013, your taxes will go up.
For example, assume you are married, both under 65, two children under 17 and have income of $50,000. Your federal tax liability will be about $1,850 higher for 2013. This difference will either reduce your federal tax refund or increase your balance due. The changes in my example come from the child tax credit reduction to $500 per child and the removal of the 10 percent income tax rate for 2013. This is a simple example, yet will be common in our area. The income tax difference between 2012 and 2013 will be felt by all taxpayers regardless of income if nothing is done and the current laws are allowed to expire/change. Whose fault is it? Democrats or Republicans?
The answer is both.
Undoubtably some will disagree with my preceding sentence. If you don’t believe both parties are responsible, look at the data and voting records. As a tax professional, every year I hear people say a flat tax is the answer. Ask your tax preparer what your effective tax rate is. Chances are your effective tax rate is less than the proposed 15 to 20 percent flat tax rate.
I want to emphasize that this problem is for 2013, not 2012, consequently this will not have a bearing on the tax return you will file in a few months.
I am writing this to encourage you to contact our elected representatives and get clear, honest answers about what they plan to do about this problem. I have written to both Tim Walz and Al Franken and the replies were only to thank me for my concern. Neither has contacted me with any solutions or ideas.
We have all been bombarded with advertising for a number of political candidates, and personally I am saddened by the inaccuracies and leading language from both sides. Many of the ads only tell you the bad side of the story, when you research and learn all the facts, your opinion of a particular candidate may change.
We as a nation will have to pay more tax and spend less to reduce our staggering deficit.
Our elected officials have some major work to do. When someone says the government will pay for this. Who is the government? We are. We will be paying. The government spends our money. We all pay tax of some sort. Let’s spend our money wisely and reduce the deficit through wise decisions. Nothing is free in this world, everyone pays somehow. My opinion is the government is very inefficient and poor managers of our money.
If you think your tax liability is not going to change in 2013 under current 2013 tax law, call your tax adviser and ask them.
Again, contact your elected official, question them, research their voting record, all this information is available whether online, print or other means.