United States

ATRA stabilizes nation's tax policies RSM's Susswein argues


Following the U.S. Congress's enactment of the American Taxpayer Relief Act (ATRA) of 2012 at the beginning of the year, the nation is experiencing stable tax policies for the first time in a decade, easing business concerns with tax uncertainty, Don Susswein, principal, Washington National Tax Office, RSM, told delegates during the keynote address at the conference.

Susswein pointed out numerous reasons why the ATRA’s passage has proved positive and eased numerous concerns taxpayers had. It made the roughly 80 percent of the Bush-era tax cuts permanent – the portion going to those making under around $300,000. It also preserved substantial Bush-era tax benefits for those with more income, most notably a permanent, inflation-indexed estate tax exclusion of around $10 million per couple, combined with a reduction of the estate tax rate to 40 percent. When both income and estate taxes are considered, for many well-heeled investors, the overall impact was to preserve the bulk of the Bush-era tax cuts. ATRA also made permanent partial relief from double corporate taxation by taxing corporate dividends at capital gains rates.

The Obama administration had threatened to reimpose the top ordinary income tax rate on dividends, but that did not come out of the final package. In addition, there was no “Buffet Rule” which many believed to be a thinly veiled attempt to eliminate capital gains breaks.  With no expiration dates for these provisions, this likely will represent the tax structure for the foreseeable future absent a grand bargain on deficit reduction or an economic crisis. Regardless of which party believes it got the most in the negotiation, the fact is that the investment and business community suffered far more from negative political rhetoric than from the actual provision adopted.

For more information please contact your RSM professional or Donald B. Susswein, Principal, 202.370.8216