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Much -- Six trillion et Al worse that is how long Americans will spend trying to comply with the tax code.
And an effort to follow their individual returns almost week on -- in eastern time show.
We examined the tax paying.
That we all feel it's getting more painful every year kicking things off of me today on the problems of the tax -- and also what high income earners doing with their money's got hot and the costs Tax Foundation Scott it is great to see -- let -- be a great person to kick off this series.
You're written so many reports of examined so much about the high income while others in this country -- you've also been a big advocate that -- got -- simplifying.
The tax code it's getting worse Scott why are we in this situation and now.
Well you're absolutely right surely annoys you mentioned we spent about six billion hours a year complying and filling out our tax returns each year.
And that amounts to about.
Three million people doing nothing but tax returns each and every year that's about the population of Chicago.
And the reason is it because there's about number one about a 170 different tax provisions in the code that -- all this complexity.
And then you have things like the Alternative Minimum Tax which is like a parallel tax system.
That really affect people on high income areas like new York New Jersey California.
And so it's all this sort of comes together to create this enormous complexity that the taxpayer advocate the at the IRS calls.
The -- most -- Threatening thing.
For individual taxpayer.
Just I want it to to focus on this because this year in particular is differ from any other year now.
What -- filing now it's 2012 so the the last nations at plaza and second at fact and we're gonna -- -- pretty much know we're gonna get.
Individuals are going into their accounts offices saying.
How I might get a deal with next -- and this -- small businesses this is high income martyrs who had no idea how big their head is gonna be because many deductions have been canceled.
The AMT is permanent but I'm sorry I didn't think it was inflation adjusted -- mean what do you think that these individuals are doing right now.
To figure out how to deal with the future which looks globally.
Well -- tremendous amount of an uncertainty and it a lot of it has to do it not only the increases in tax rates remember the top rate went from 35% to 39 point 6% but also the introduction of a lot of obamacare taxes which increase the Medicare tax.
To three point 8% and so that only increased your top rate to over 43%.
And then there's their higher taxes especially obamacare taxes on on non wage earnings like -- capital gains and dividends.
That increases -- those rates to over 23%.
And so now you've got to figure out -- take more wage income or can I translate some of that income.
Into capital gains or dividend income and saved myself a lot because of the difference between those rates.
A lot of for the game plane that has to go -- But a lot of these people do have that flexibility.
And that gives -- greater advantage over a lot of other American.
Charitable deductions I think that is one kind of theme that I've been saying inquiries marriages that what you can do to bring down.
To -- right I got -- other brackets -- you're sitting in the top bracket but what you can do is charitable donations that this year this helps you for next year you bring down your -- your tax basis.
-- by giving away 5101000.
Dollars whatever is to charity in is that one.
One move that you think that people can make now to save themselves from from you know not wanted to -- the building next year.
-- the charitable deduction always is one of the better ways of reducing your overall tax burden.
But one of the other complexities that was introduced on that on that.
Fiscal cliff tax bill.
Was the introduction of what we call them the peace provision which limits all your overall deductions things like state and local tax deductions and other deductions will be limited so now you've got to go back here -- -- figure out well.
If fiery if I do this deduction will be limited in some fashion so there's a tremendous amount of complexity that's gonna hit especially high income people.
Going forward this year.
Well I mean if you look at the numbers of -- again at us throughout the series this week it is amazing that basically 47% of Americans.
Barely pay any taxes not at all.
A federal amounts collected is by 10%.
Of the US population and and that is it's and balances say the least I guess I want to say hero -- guys producers are right.
It's got hot thank you very much we're gonna dig into this all -- -- it's great to have you here.
You -- Cheryl thank you.
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