Tax Strategies

A new report from the Organization for Economic Cooperation and Development finds the gap between rich and poor in OECD countries has reached its highest level in more than 30 years, and the traditionally redistributive effects of progressive income tax systems have become less effective since the mid-1990s.

Senate Democrats and Republicans were unable to muster the necessary number of votes to pass two competing bills to extend the expiring payroll tax cut on Thursday night.

For those who had hoped that the Joint Select Committee on Deficit Reduction, aka the Supercommittee, would find a way to reduce the deficit, the announcement that they had failed to reach an agreement came as a disappointment.

December represents one last chance to consider certain year-end tax strategies before the door closes on the amount of income, deductions and credits set for the year. Many traditional eleventh-hour techniques are applicable to this year-end 2011, with certain twists that recognize changes on the horizon for 2013. This column examines a handful of considerations especially useful to the individual taxpayer in these final weeks of 2011.

Senate Republicans are offering their own legislation to extend the payroll tax cut while avoiding an extra surtax on millionaires.

Senate Majority Leader Harry Reid, D-Nev., said Monday that he plans to introduce legislation this week that would extend the payroll tax cut that is due to expire at the end of the year.

The congressional supercommittee called it quits this week only a couple of days before its November 23 deadline, unable to reach a consensus on either taxes or spending cuts.

President Barack Obama told an audience in New Hampshire on Tuesday that their taxes would go up an average of $1,000 to $1,500 unless the payroll tax cut were extended and expanded as part of his jobs bill.

President Obama signed into law Monday a bill that provides tax credits for hiring veterans and repeals a 3 percent tax withholding requirement on government contractors.

A senior member of the tax-writing House Ways and Means Committee has introduced legislation to roll back the estate tax rates to pre-Bush tax cut levels.