May 12, 2009

U.S. Treasury details tax proposals

The U.S. Treasury Department said a new tax proposal seeks to raise the tax rate for couples with an adjusted gross income of about $235,000.

The proposed 36 percent rate, up from 33 percent, would apply to couples earning an adjusted gross income of $250,000 less the standard deduction and two personal exemptions, The Wall Street Journal reported Tuesday.

The standard deductions, however, are generally considered a minimum, as most couples earning $250,000 find itemized deductions that put them below the $235,000 threshold. In practice, many couples in this bracket would see their taxes decline, as the proposals include lowering taxes from 33 percent to 28 percent for those with an adjusted income tax between $209,000 and $230,000, the Journal said.

Doug Holtz-Eakin, a former adviser to Sen. John McCain, R-Ariz., told the Journal the proposal doesn't sound exactly consistent, with President Barack Obama's campaign pledge to not raise taxes for couples earning $250,000.

John Castellani, president of the Business Roundtable, said other proposals that would restrict tax avoidance among U.S. corporations that set up foreign companies would hamstring American competitiveness.

The proposed tax increases on U.S. companies by the Treasury threaten the jobs of tens of millions of U.S. workers, he said to the Journal.