Six Issues in Taxation

НP ОР SIX ISSUES IN TAXATION E Taxation continues to be one of the most controversial financial topics. Here are some of the most commonly talked about issues. TAXATION OF FOSSIL FUELS 1. Fossil fuels include coal, oil and natural gas. Fossil fuel companies are able to form Master Limited Partnerships (MLPS) which shield them from virtually all corporate taxation. Renewable energy companies are unable to form MLPS. This advantage promotes the continued use of harmful fossil fuels. Since 2008, fossil fuel MLPS have increased over 5x and are now worth more than $500 billion. Environmental advocacy groups are pushing for the same corporate structure for renewable energy companies. 44444 = $100 billion WHAT THIS MEANS FOR YOU Possible increase in renewable energy use if green energy companies are allowed to form MLPS. Continued use of fossil fuels. ..... ...-- 2 REPEAL OF ESTATE TAX It is calculated by determining the Taxable Estate. Estate tax is. "a tax on your right to RIP transfer property at your death." -IRS 2 2$ Fair market value of everything you own Value of lifetime taxable gifts Taxable Estate Then applying a federal tax rate of up to 40%.2,3 Deductions An estate tax return filing is only required for taxable estates exceeding $5.43 million in 2015. IRS collected $13.1 billion in estate tax in 2013.3 24 24 2$ %24 %24 = $1 million $ = $1 billion WHAT THIS MEANS FOR YOU REPEAL Maintained estate tax There is an ongoing effort to repeal the estate tax? if the repeal is not approved. DENIED 3. 3 HEALTH INSURANCE PROVIDER TAX In 2014, the Affordable Care Act imposed This tax is projected to rise to: a tax on health insurance providers. 2018 $14.3 billion $15 bil This may result in higher premiums for many individuals and families. In 2014, the average insured employee paid: $77 for individual coverage $266 for family coverage As a result of the tax, this is expected to rise in 2018 to: $200 for individual coverage $500 for family coverage $100 WHAT THIS MEANS FOR YOU Increasing premiums unless you qualify for subsidies. A HEALTH INSURANCE PENALTIES The Affordable Care Act carries a penalty for anyone not covered by insurance in 2015. WHAT THIS MEANS FOR YOU Penalties for not having insurance. This year, the penalties are: Individuals over 18 $325 $1000 Individuals under 18 $162.50 $1000 Maximum per family $975 $1000 Or 2% of yearly household income (whichever is higher). 5 TAX PROVISION EXTENSION Tax professionals are urging Congress to extend these provisions to prevent: Tax refund delays 57 tax provisions expired Amended tax at the end of 2013. returns So far, Congress has extended some taxes: The Research and Bonus Development (R&D) Depreciation Many more remain undecided on. WHAT THIS MEANS FOR YOU Possible uncertainty regarding how to plan finances and file taxes. Possible tax return delays. 6 CORPORATE TAX REFORM E Corporations sheltering profits in tax havens costs: The Federal Government $30 to $90B a year $90 bil States $20B a year $90 bil Congressional efforts to discourage corporate tax avoidance have been unsuccessful. States are now going after corporations with their own off-shore tax shelter legislation. Most recent state to enact legislation: Oregon predicts $18 million per year in additional tax revenue. = $1 million States in the process of enacting legislation: Maine predicts $5 million per year in additional tax revenue (if the legislation is passed). Minnesota and Rhode Island are considering similar legislation. = $1 million States that have already enacted legislation: Montana Alaska West Virginia District of Columbia WHAT THIS MEANS FOR YOU $& $ Legislation will help states minimize budget shortfalls. Sources [1] http://www.dcbureau.org/201409229967/natural-resources-news-service/multi-billion-dollar-tax-rules-favor-fossil-fuels-hurt-gre en-energy-competitors.html [2] http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-Tax [3] http://www.bloomberg.com/news/2014-07-30/house-may-vote-this-year-to-repeal-estate-tax-camp-says.html [4] http://www.forbes.com/sites/theapothecary/2014/02/20/the-strange-effects-of-the-health-insurance-annual-fee-tax/ [5] http://www.foxbusiness.com/personal-finance/2014/10/28/blame-congress-your-tax-refund-could-be-delayed-in-2015/ [6] http://www.forbes.com/sites/deanzerbe/2014/04/03/happy-days-for-research-tax-extenders-clear-senate-finance-with- expanded-rd-tax-credit/ [7] http://www.businessweek.com/articles/2014-04-17/u-dot-s-dot-states-target-corporate-tax-shelters-overseas [8] https://www.healthcare.gov/fees-exemptions/fee-for-not-being-covered/ School of Business D'Amore-McKim Northeastern University onlinebusiness.northeastern.edu/neu-mst %24 П |%24