Recent news includes President Obama seeking to forestall sequester cutbacks with a cost cutting and revenue raising package. The revenue raising focuses not on rates as did the American Taxpayer Relief Tax Act. Rather, the revenue raising is reported to be through closing tax loopholes. The exact difference between closing tax loopholes or income tax rate increases is somewhat a matter of perspective. Whatever it’s called, at the end of the day either the amount of tax you pay goes up or goes down.
Details at this point are scarce although digging deep into some of the available information indicates the guidelines for closing tax loopholes and in fact the definition of what a loophole is revolves around tax breaks, deductions, credits and other tax reduction mechanisms that are not widely used by the majority of the country. Although these loopholes are technically available to every taxpayer, the typical taxpayer for example has no use for tax incentives available to large oil companies or a what’s known as the carried interest rule that affects hedge fund managers and other executives of certain investment vehicles. It seems tax loopholes utilized by the widest group of taxpayers will be mostly unaffected if in fact the drafting stays true to these guidelines.
As a result, some taxpayers will not be touched by tax increases while other taxpayers utilizing less common tax loopholes will see a tax increase.
For more information on how this affects your tax situation or for assistance with other law concerns, contact Horowitz Law Offices.