The budget deficit remains daunting, but the IRS has fewer resources to close the estimated $385 billion “tax gap.” Don’t be surprised if Congress is compelled to implement the “Buffett rule” or a similar revenue-generating provision (see below).
Strategy: If you’re a high-income taxpayer, take steps now to reduce your tax exposure if the Buffett rule becomes law.
Here’s the whole story: The Buffett rule is intended to reflect the principle that everyone, regardless of his station in life, should pay his fair share of the federal income tax burden. Investment guru Warren Buffett, for whom it is named, initially proposed the idea. The billionaire mogul is a longtime supporter of higher taxes for the wealthy.
This sentiment has been echoed by the Obama administration on several occasions. The Buffett rule stands behind the basic premise of imposing a minimum 30% tax rate on taxpayers earning at least $1 million a year. If the...(register to read more)