In a recent issue of Forbes, the U.S. President of Operations at Xerox, Jamie Sutherland, and the chief creative officer at Blumer and Associates, Jason Blumer, co-wrote an article regarding the effects prospective tax changes will have upon small businesses. According to the article, “the ultimate dilemma for the next President will be getting the tax revenue to balance the budget, decreasing the national deficit and spurring our economy back to health.” This all must be accomplished by an equality of taxation that reaches all demographics. This is no small task, and the implications of these changes could very well affect most Americans.
The Bush-era tax cuts are set to expire at the end of the year. Both parties are interested in extending the tax cuts. The cuts affect individual income tax rates, as they include a reduction; capital gains and dividends rates, also reduced; marriage penalty relief; the $1,000 child tax credit; the child and dependent care credit; and the Alternative Minimum Tax. The tax benefits, which have been popular, will expire on December 31, 2012.
One of the candidates, Romney, has said he would extend all Bush-era tax cuts without change. President Obama has also agreed to extend the cuts, except for the wealthy—which, according to his administration, classify as individuals making over $200,000 and family units making over $250,000.
In regards to C Corporations, both candidates have expressed willingness to reduce the corporate tax rates. According the Forbes article, passing such legislation is not an easy process; it may take one or two years for this legislation to have any effect on businesses.
There are more aspects to the Bush-Era tax cuts that could affect small businesses. It is essential to stay attuned to developments and to have a trusted tax attorney to advise you.
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