Many of the changes President-elect Obama wants will make a direct hit on your company’s operations. Here’s what he’s proposed during the campaign — and what’s likely and unlikely.
1. Repeal of some Bush tax cuts. Obama favors:
- reinstating the pre-2001 top individual tax rates of 39.6% and 36% for families making more than $250,000 ($200,000 for singles)
- making permanent the 10%, 15%, 25% and 28% individual tax rates, and
- restoring the personal exemption phaseout and itemized deduction limitation phaseouts at an increased threshold of $250,000 for joint filers ($200,000 for singles).
2. Higher FUTA wage base. Employers would have to contribute more into the federal unemployment tax system – especially those located in states that still have a $7,000 wage base.
3. Changes in healthcare financing. Although you probably won’t see a universal healthcare push, employers that don’t offer or make a “meaningful contribution” to the cost of employee health care will probably have to contribute a percentage of payroll toward the costs of a national plan. That could affect employee payroll deductions.
4. Increased payroll taxes. Maybe you’ve been hearing reports of additional Social Security taxes, but they likely wouldn’t take effect for years and they’d be phased in over a long period. Any such tax would be at a rate of between 2% and 4% (split between employer and employee). It would apply to income above $250,000 and:
- eliminate the $102,000 ceiling for the Social Security tax, and
- create a “donut hole” exemption for earnings between $102,000 and $250,000.