The year 2013 may snap a 12-year winning streak for wealthy Americans on taxes due on income, capital gains, dividends and giving money to their heirs.
The U.S. deficit, forecast by the nonpartisan Congressional Budget Office to reach a two-year cumulative total of $2.5 trillion in 2012, has prompted calls by some in President Barack Obama’s administration, Congress and a bipartisan commission to limit tax breaks for home mortgage interest, charitable contributions, municipal bonds and retirement contributions.
Rates on income, capital gains and dividends will rise in 2013 because tax cuts extended last year are scheduled to expire at the end of 2012, unless Congress acts. In 2013, top earners also face additional levies on unearned income and wages to help pay for health-care reform.
Obama has proposed letting income-tax rates increase to as much as 39.6 percent from 35 percent for couples making more than $250,000 annually or individuals earning at least $200,000. Capital gains and dividends would be taxed at a top rate of 20 percent, up from 15 percent. The highest earners face an additional 3.8 percent tax on unearned income such as realized capital gains, plus a 0.9 percentage point rise in the Medicare payroll tax on wages starting in 2013 as part of the health-care bill passed in March 2010.