- Mixed messages: Bonus depreciation is increased from 50% to 100% for assets placed in service before 2012. Reduced tax rates are only in place for 2011 and 2012. If rates will be going up by 2013 (unless, of course, extended again), why take 100% expensing. It will likely be better for many taxpayers to push some of this depreciation deduction to post 2012 years.
- Temporary might mean permanent: While we have seen that many temporary provisions end up getting renewed including retroactively, I think this will also be the case with the Social Security rate decrease from 6.2% to 4.2% for the employee contribution enacted just for 2011 (and self-employment tax drops to 10.4%). Most young people today do not expect to get Social Security when they retire so are more than glad not to have to pay in as much. I think they will push for keeping the rate at 4.2%. It is puzzling why this decrease was even enacted. With extension of the 2001/2003 tax cuts, everyone already got a tax cut, why give them more when we have deficit and debt problems?
With all of the temporary provisions in the law (more so every year), what does the federal income tax law look like without any of them? How much revenue does it raise? The Social Security tax reduction for workers and self-employed costs $111 billion per the Joint Committee on Taxation (JCX-54-10)). Will tax reform (if it happens) also look at these questions?
What do you think?
1 comment:
In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time. Payroll plays a major role in a company for several reasons.
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