Wealthy Americans could pay around $50,000 more in taxes if Congress decides to let Bush tax cuts expire this year.
For example, a married New Yorker earning about $1 million in income, with an additional $50,000 in capital gains and $5,000 in dividends may pay about an extra $45,300 in federal income taxes, $2,500 in capital gains and $1,230 on dividends if Congress doesn't extend the 2001 and 2003 tax reductions scheduled to end Dec. 31, estimates Bloomberg News.
Around 315,000 U.S. taxpayers earn more than $1 million, according to the Joint Committee on Taxation. In 2011, federal income tax rates for the highest earners will go to 39.6 percent, up from 35 percent, and capital-gains rates will increase to 20 percent from 15 percent, unless Congress decides differently. Dividends, currently taxed at 15 percent, would be taxed as ordinary income with rates as high as 39.6 percent.
President Barack Obama wants to end the tax cuts enacted by President George W. Bush for families making more than $250,000, and raising capital-gains and dividend rates to 20 percent. Congress is scheduled to return to Washington next week.
What are Penny Stocks
The lucrative and dangerous world of penny stocks.View Course »