Become an Informed Voter

As everyone knows, we will be electing a new president this coming November and with that comes at least one responsibility for eligible voters in our great country. That one responsibility is to vote!

With the responsibility of voting comes an obligation to make an informed decision about each of the candidates and decide who you believe will be the best leader for our country in the coming four years. I encourage each individual to become engaged in the issues that will be debated and discussed over the next three months. The more understanding we have of the issues will allow us to be confident voters in the candidate of our choice for which we all benefit. So, I thought it would be helpful to briefly expand upon one normal area of discussion – tax rates.

Tax policies are normally part of the debate that occurs during a presidential election. An understanding of a small portion of tax policies is beneficial for us all to have. The current federal tax rates for individuals range from 10% to 39.6% depending upon income levels. The tax rates are progressive, the higher your income the higher the tax rate. The rates specifically are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. As you can see, there are some significant differences from one tax bracket to another. Each year the income levels increase, as a result possibly causing the same dollar to be taxed at a higher rate in subsequent years. According to 2013 IRS data, $1.2 trillion was generated from the federal individual tax rate collectively. As might be expected, $368 billion was generated from tax returns in the 39.6% bracket, however the second largest revenue generator was $313 billion from the 25% bracket.

Whether the rates are too high or too low, I will leave for you to decide. However, our objectives at Baldwin in working with clients is to help them understand the tax they are paying and how to properly plan so the rate they are subjected to is the lowest they can achieve while complying with the tax code. Each calendar year is a tax picture for each individual and the timing of income and/or deductions can have a significant impact upon the tax rate applied. Questions and planning normally revolve around attempting to level out income and possibly bunch deductions in one year. We are available to meet with you and help you determine what your options might be.

All agree the United States tax code is complex and we are here to assist you and your business to interpret properly so your financial wealth is improved. Since tax rates will be one of many issues discussed during the upcoming presidential debates, it is important to inform yourself and become a knowledgeable voter. Don’t forget, election day is November 8!

Posted by Myron Fisher, CPA, CGMA