Tax Planning

, ,

Health Care and Education Reconciliation Act of 2010

, ,

On March 23, President Obama signed the "Patient Protection and Affordable Care Act." With the next installment on March 30 he signed the companion "Health Care and Education Reconciliation Act of 2010." Together, these two acts represent the biggest change in how the US finances healthcare since Medicare was created back in 1965. Politics aside, It's truly monumental legislation. Just as President Harry Truman gave us the "Fair Deal," now Joe Biden -- as he commented when he thought he was off mic -- has given us the "Big *^@*#*@ Deal."

Healthcare reform has been an intensely political process. Not one single Republican voted for the law in either the House or the Senate. And polls show that Americans are overwhelmingly confused and concerned. They don’t know just what the new law does, and they don’t know how much it’s going to cost. That’s no surprise considering the actual texts of the bills runs over 2,500 pages. I wonder if there is actually any single person who understands it all, not likely.

, , , ,

Hiring Incentives to Restore Employment (HIRE) Act

, , , ,

As was expected, today President Obama signed the most recent jobs bill passed by Congress, the Hiring Incentives to Restore Employment (HIRE) Act.  While many businesses are hesitant about hiring new employees within the current economic climate, "this jobs bill should help make their decision that much easier," President Obama said during the bill signing.

While I am happy to see some effort being made to help small businesses let us be sure to keep this HIRE Act in perspective. First, unless you were already considering hiring another employee the Act is not going to offer you enough hard dollar incentive to make a hire. For example, if you were to hire a qualified previously unemployed worker and pay her $30,000 this year your tax savings would amount to $1,860. Plus, if you kept her on the payroll for a full 52 weeks you would also get a tax credit of $1,000. Your total potential savings is $2,860.  You can see that while nice to have, it is not likely these tax breaks by themselves will create much hiring. But, for all you business owners out there currently debating whether you need to add staff, this just might help you pull the trigger and make the hire.

,

Worry no more, the government comes to our rescue... the HIRE Act

,

President Obama is widely expected tomorrow, Thursday March 18, to sign into law the $17 billion Hiring Incentives to Restore Employment, or HIRE Act that passed the Senate on Wednesday on a bipartisan vote of 68-29.

What, you have doubts? The Senate has approved legislation that provides businesses with a payroll tax exemption for hiring new employees.  Certainly this legislation is a positive step but let’s face it, employers are not going to run out and start hiring the unemployed for the sake of hiring, at least not unless there is a 100% refundable tax credit. After all, would you spend $100 to save a little over $6? Of course not. But, for those businesses that may be on the brink of hiring the tax benefits in the HIRE Act could make a real difference.

,

Family Business Transition Dilemma – Who Gets The Baton?

,

Family business transition planning is frequently predicated on the assumption that someday the parents will be passing on the baton to one (or several) of their own children. What more satisfactory way of crowning their lifelong efforts and hard won success than to pass on the legacy to their own kin so they too can continue to enjoy and prosper from it.

However, children are never clones of a parent and generations also vary one from another so that we can, these days, point to enough commonalities among age cohorts to be able to characterize this person as a baby boomer, that one as a Gen X and another as a Gen Y.

, ,

Fuel for Tax Rate Increases - The Capital Gain Tax Debate

, ,

With the recent release of some IRS statistics that the 400 highest-earning U.S. households reported an average of $345 million in income in 2007, up 31 percent from a year earlier and  the average tax rate for these households fell to the lowest in almost 20 years you can imagine the political hay that may be made.

Each household in the top 400 of earners paid an average tax rate of 16.6 percent, the lowest since the agency began tracking the data in 1992, the Internal Revenue Service statistics show. Their average effective tax rate was about half the 29.4 percent in 1993.

,

What does being "agnostic" about raising taxes really mean? Probably that our pockets are about to be emptied.

,

Never let it be said that these aren't some interesting political times. Our federal government has been spending money faster than the printing presses can create it and the politicos have yet to figure out how they plan to pay for it all. Forget the debate of right or wrong on the spending, the fact is the bill will be coming due.

If you'd like to get an idea of what may be coming down the pipe for us, Bloomberg BusinessWeek had an interview with the President you really should read.

President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit. Now that's a new way to be wishy-washy with an answer.