Tax Rate Outlook for High-Income Individuals
Charting a course
The scheduled expiration of the Bush-era tax cuts and the current-law temporary estate tax regime at the end of next year leaves taxpayers facing the same uncertainty over future tax rates that prevailed through 2009 and 2010. If Congress fails to adopt a more permanent tax structure before the end of 2012, the income tax rates and the estate and gift tax would revert to pre-2001 law, ushering in across-the-board increases for all classes of taxpayers. Although there is nearly unanimous support at the White House and in Congress for preventing tax increases on low- and middle-income taxpayers, there are deep disagreements over what to do about tax rates for higher-income individuals – typically defined as singles with income above $200,000 and couples with income above $250,000.
Charting a course: Tax rate outlook for high-income individuals analyzes the prospects of Congress changing tax rates on earned income and income from capital gains and qualified dividends, particularly as they apply to more affluent individuals. It also examines the possibilities of changes to the estate and gift tax regime and the alternative minimum tax. In each case, it looks at the factors that will influence the decisions Congress makes, suggests when action might be expected, and provides planning considerations based on the various possible outcomes.