November 28, 2012
Diane Giordano, Tax & Business Services Partner, Quoted in Long Island Business News Article "CPAs Plan for Fiscal Cliff"
By Gregory Zeller
With Election 2012 behind us and the so-called "fiscal cliff" dead ahead, accountants across the country are preparing individual and corporate clients for an economic blow that could make the 2008 housing bust look like a bad night at the poker table.
As it stands now, the new year will begin with the expiration of virtually every post-2001 tax cut. The end of the "Bush-era tax cuts" will not only raise the taxes paid by the average American household (by as much as $3,500 annually), but will also reduce spending on critical government programs – including defense, Medicare and various economic-stimulus initiatives – by more than $1.2 trillion over the subsequent decade. Throw in some terrifying details (like a 50-percent increase in the tax rate for low-income taxpayers) and it's no wonder observers – and, increasingly, the public – are fearful of a second Great Recession, or worse.
"We have been watching the political landscape in anticipation of new or modified laws to help mitigate the potential tax increases," said Diane Giordano, a tax partner in Marcum's Melville office. "Now that we know who the president is, we can assume his platform will be implemented, or attempted to be implemented."
Certain measures proposed by the freshly reminted President Barack Obama, Giordano added, will significantly define how America responds to the dire economic scenario.
"For example, the president has proposed that dividends be taxed as ordinary income, at rates as high as 39.6 percent," she said. "That's a big increase from the current 15-percent rate."
And that has already led accountants like Giordano to offer advice they might not otherwise have offered.
"We've been advising companies that issue dividends to plan to issue the dividend payout prior to year end to avoid the potential tax increase," she noted.
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