President Obama’s 2013 budget plan calls for a tax hike on the wealthy at the same time spending more funds on capital projects.  You might say that his tax plan is nothing new, but in fact it is.

You see, Obama administrations budget plan has been in constant flux since he took office. Now it has morphed into a monster.

Initially, Obama called for ending the Bush-era tax cuts, that were extended due to public outcry and government backlash.  For 2013, he has once again called for the end to these tax cuts. Next he added a proposal to limit tax deductions to the rich. But I guess that still wasn’t enough revenue to cut the trade deficit.  So he added a proposal limiting tax deductions and tax breaks to the wealthy.

What’s that, still not enough money!

From out of nowhere, Obama proposes that we raise the dividend tax on taxpayers making over $250,000 to almost 40% (up from the current dividend tax rate of 15%) to generate an addition 200 billion dollars to pay down the trade deficit.

What is happening here?  The continuous changes to Obama’s budget plan makes me ask questions about his leadership and competence: Does he just lack business savvy and common sense? Does he have inept and/or inexperienced economic and tax advisors? Does he have competent and expert advisors but doesn’t listen to them due to arrogance? Is he using his tax plan as a presidential election campaign strategy to win the lower and middle class vote?

Oh, I forgot to mention that Obama defends his tax hike plan with the fact that America must cut the trade deficit.  But in the same breath, his budget plan calls for billions in additional spending.  He is proposing spending federal dollars on community colleges, school construction, home energy improvements and a half TRILLION for highways and commuter rail.

Obama’s multi-trillion budget calls for generating $849 billion by expiring the Bush-era tax cuts from taxpayers making over a quarter of a million dollars annually. Another $584 billion by limiting the value of tax deductions and tax breaks to 28%. It also Includes a tax proposal to generate $206 billion by raising the dividend tax rate on wealthy taxpayers to 39.6% from the current dividend tax rate of 15%.

That’s not all! The proposal calls for getting $61 billion from big banks over the next 10 years (to pay off the bailout and help taxpayers in foreclosure), and another $50 billion by raising the tax rate to 30% for anyone earning over $1 million a year. This tax proposal is called the “Buffet rule”.  Finally, Obama plans to raise $41 billion by eliminating tax breaks for oil, gas and coal companies.

Obama says that taxing the wealthy will give lower and middle class taxpayers a chance to succeed; put all Americans on the same level.  Can he actually believe that? Is he so naive as to think that a few extra bucks to middle class taxpayers will mean the difference in getting rich?

Obama’s 2013 budget plan looks, smells like and tastes like a plan for a Socialist society, not once based on Capitalism.  Capitalism means that anyone with the desire to work hard, regardless of income, have a chance to be successful.  We see success stories every single day.  Getting rich is about sacrifice.  While Socialism makes individuals lazy and uninterested, capitalism spurs growth, initiative, creativity and self improvement.

The biggest reason I hate Obama budget proposal is jobs.  Continued taxation of the wealthy and big business will have a direct negative effect on job creation.  Businesses will need to allocate funds to cover the tax hikes, in lieu of creating jobs.

I commend President Obama for thinking about fixing our schools and highways. Sure they will create jobs but they aren’t private sector jobs. That means that the government is footing the bill; it’s a more expensive unemployment plan. What happens when the construction is finished, will unemployment rise again?

I haven’t even touched on the other elephant in the room, ObamaCare.  While the government “experts” estimate it’s cost at $1 trillion over the next decade, you could probably triple that projection.

Instead of taxing the wealthy and big business, President Obama should look back at successful budget plans implemented by other presidents.  President Ronald Reagan’s budget plan brought the country back from the brink of financial ruin WITH tax cuts and government spending.  A budget plan that calls for cutting taxes will just stymie economic growth and prevent job growth.

What is Obama thinking?

With tax and accounting professionals heading into the beginning of the TY 2009 income tax filing season, the IRS has announced significant new changes that it plans to implement starting in Jan. 2011, along with enhanced enforcement measures that will start this season. The changes are geared toward providing regulation of the thousands of unlicensed and uncredentialed tax preparers across the country who offer filing services.

The most notable of the proposed changes schedule to start in 2011 (for 2010 income tax reporting) includes requiring paid preparers to register with the IRS, receive a “preparer tax identification number (PTIN), take an initial competency test and take at least 15 hours or continuing professional education (CPE) courses per year. Ethics rules found in Circular 230 would also be extended to this new group of paid preparers. The changes in licensing and CPE would not affect professionals already recognized by the IRS, such as CPAs, enrolled agents and attorneys, so long as they are in good standing with their respective licensing agencies.

“As tax season begins, most Americans will turn to tax return preparers to help with one of their biggest financial transactions of the year. The decisions announced today represent a monumental shift in the way the IRS will oversee tax preparers,” said IRS Commissioner Doug Shulman. “Our proposals will help ensure taxpayers receive competent, ethical service from qualified professionals and strengthen the integrity of the nation’s tax system. In addition, we are taking immediate action to step up oversight of tax preparers this filing season.”

Changes for 2010
In addition to the changes proposed for next year, the IRS has started sending notices to to approximately 10,000 preparers across the country who handle “large volumes of specific tax returns where the IRS typically sees frequent errors.”

These include reminding the professionals to practice due diligence when handling Schedule C income and expenses, Schedule A deductions and qualification for the EITC and homebuyer credits. Agents may also visit many of these preparers and, under a separate enforcement program, the IRS is also planning to conduct compliance investigations of paid preparers that may include agents posing as taxpayers.

Do you suppose the IRS has an ulterior motive for making these changes – like increasing revenue? The global recession has resulted in less Americans working and that means less tax revenue for the IRS. By implementing these measures, the IRS can make up some of the difference by dissuading tax preparers and tax advisors from taking chances on questionable deductions. If you are a tax preparer or tax advisor – beware!

source: cpatechnologyadvisor.com