We have previously looked at Mitt Romney’s tax proposals on estates and investment income. In this post, we’ll turn our attention to what President Obama plans to change about the current tax laws. They include increases for many high income individuals and families.
President Obama proposes that the estate tax exemption be set at $3.5 million with a tax rate of 45%. This is something of a tax increase, depending on how you look at it. It is an increase over current levels, but a decrease over the estate tax levels that are scheduled to take effect at the end of 2012 unless congress acts before then.
For investment taxes, there can be no doubt that Mr. Obama proposes tax increases for the highest income individuals and families. People who have more than $250,000 in total income per year would see an increase in their taxes on long term capital gains to a maximum rate of 20% from the current rate of 15%. There would not be a change for lower earning taxpayers. Tax on dividends would dramatically go up for those in the top two income brackets as President Obama proposes they pay 36% and 39.6% respectively. Those in other brackets would continue to have a maximum tax rate on dividends of 15%.