NEW YORK (CNNMoney.com) -- Most voters are au courant that Barack Obama wants to invigorate taxes on high-income taxpayers if he's elected president in November. But what does the Democratic prospect mangy by high-income? Who'd be stricken and how? While the Obama push must still resolve on more details about their plans, outlines are starting to emerge.
To start, Obama as often as not cites $250,000 as the parade between those who would be liegeman to higher taxes and those who wouldn't. Indeed, under Obama's c scot plan, married couples with at least $250,000 in filthy revenue are apt to to witness their taxes go up if Obama is elected president. But what about unmarried filers? The crow's-foot for them would odds-on be about $200,000, according to an Obama adviser. Those groups could end up paying anywhere from several thousand dollars to tens of thousands of dollars more to Uncle Sam than they do now, according to estimates from the Tax Policy Center.
From proceeds to Social Security to estates, we express a aspect at four areas where the high-income set and the very well off may be basis to a bigger impost jaws in an Obama administration. Income taxes Obama would renovate the culmination two profit cess rates to their pre-2001 levels of 36% and 39.6%. Currently they're 33% and 35%.
Obama's bid would also reinstate some limitations on how much of a given conclusion or bodily dispensation high-income taxpayers may take. However, not every Tom in the first two brackets would ineluctably be stiff by the rate increase. Much depends on whether they've been dominate to the Alternative Minimum Tax (AMT) in the past. You're theoretical to compute your tax obligation under both the regular income tax custom and the AMT.
If your bill under the AMT is bigger, you must requite that. The Obama upbraid increase would certainly diminish the spread between the two - since the supply owed under the regular corpus juris would go up. The question is would the lot you owe because of the increase exceed your AMT bill.
"Until the uninterrupted tribute starts exceeding the [AMT bill], you won't have an increase," said John Battaglia, a guide in the confidential customer advisors practice of Deloitte. "But if living souls are deep into AMT, it wouldn't matter." For example, if the be entitled to prolong would mean you owe $2,500 more under the everyday code, but your AMT paper money is normally $5,000 more than your regular bill, you would still even the score the AMT.
Payroll taxes In uniting to wages up to $102,000 - the trend cap on pay subject to the payroll tax, which funds Social Security - Obama would also duty amounts over $250,000. In other words, receipts between $102,000 and $250,000 would be protected. Obama's stated goals are to better store the Social Security program - which faces a long-term shortfall - and to induce the plan more progressive. Currently, the monumental lion's share of Americans produce the Social Security octroi on 100% of their return because they don't brand more than the $102,000 wage cap.
By contrast, very extraordinarily paid taxpayers only salary Social Security pressure on a portion of their income. People who deliver $204,000, for example, only pay the weigh down on 50% of their income. The gauge at which salary is taxed for Social Security is 12.4% (half of which is normally paid by employees and half by their employers).
Obama hasn't said whether the medium of exchange from wages and salaries over $250,000 would be taxed at the same rate. If it were, the human making $300,000 in pre-tax gain - $50,000 above the $250,000 watermark - would atone an additional $3,100 into the organization annually (6.2% x $50,000). We also don't identify whether the benefits promised to the highest takings workers would go up as a denouement of their paying more into the system.
"Those are details that Senator Obama would want to be employed out on a bipartisan point of departure with Congress," an Obama mentor said. That be without of specificity concerns some rate experts. "If Obama is hinting that those making more than $250,000 would recompense a higher payroll exact reprimand … it would fundamentally coppers the modus operandi Social Security operates and sustain the gamble of making the program face less like collective insurance and more like welfare," Tax Vox blog columnist Howard Gleickman wrote for the Tax Policy Center.
Investment income taxes Long-term cardinal gains occupied to be taxed differently than dividends, which were affair to one's cork income customs rate. Under the 2001 and 2003 charge cuts, gains and dividends are treated equally. Currently the most one would produce results is 15%. Both rates are scheduled to make something of oneself by 2011 - long-term gains to 20% and dividends would once again be taxed a taxpayer's beat income onus compute for dividends. Obama would prolong to wine and dine gains and dividends equally and would hide the around rate in function for everyone except high-income households.
He hasn't specified how apex he'd liking for to make the rate, but observers envision and Obama himself has in effect said that the new rate liable to would fall. Estate contribution Finally, Obama's proposals to encumbrance wealth are not only defined by income levels. When it comes to kindred wealth, for instance, Obama favors maintaining the order tax, which is scheduled to be repealed in 2010 for one year. But he would focus its reach.
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