Monday, July 23, 2012

What Taxaggedon Means For Small Gaston County Businesses

Economists at the National Association of Home Builders analyzed the end of the tax cuts on home builders. Home builders are typically small businesses, 80% are “pass through” entities such as Subchapter S Corporations, Limited Liability Companies, Partnerships or Sole Proprietorship, meaning business income is applied to personal tax returns.

These economists stated that if the 2001 -2003 Tax Cuts, as well as recent payroll tax cuts are allowed to expire then there are “large consequences”. Specifically the “pass through” entities above will see tax rates rise from the bottom 10% to 15% and onward to top rates of 35% and 39.6%.

Capital Gains would rise from 15% to 20% while dividends go from 15% to ordinary income rates topping out at the above 39.6%.

To have a multi-generational business a top estate tax rate of 55% and an exemption falling to $1 million dollars would have to be overcome.

For the country at large the Congressional Budget Office estimates the “drag” on the economy on 2013 will be $560 billion resulting in the CBO growth forecast falling from 4.4% to 0.5%.

Returning is the marriage tax penalty and child tax credits fall from $1000 to $500 per child.

The mortgage interest deduction will be adjusted for income levels mostly against $250,000.

James Carville Democratic Political Strategist – It’s the economy stupid!

Anybody in government listening? Caring?

Monday, July 9, 2012


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§  South Carolina

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I found a great article by the National Association of Realtors (NAR) on the Health Care Investment Income Tax Issue

Tuesday, July 3, 2012

Obamacare Costs On Gaston County Real Estate

This is a non-political posting about Obamacare and how it will directly affect the real estate and construction industry, the workers in those industries, their families and all families with “investment income”.

  • A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%--if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to a shocking 43.8%. (WSJ)

Please note that “house sales” are included as “investment income” as well as multi -family and commercial properties. Think you can’t reach the $200,000 or $250,000 threshold?

City Data says the Median Price of a single detached home in Gaston County in 2009 was $174,426. Median Household Income was $40,334. Added together that is $214,760 annual income if the Median Gaston Family sold their home.  The question then becomes how much of the home sale was equity. At retirement time when planning to use a large home equity the tax could be 43.8%.

Frankly I question the $40,334 Income because according to the Schools Wed Site, Gaston County Teachers for elementary through high school earn $40,000 to $45,000. Two teachers at say $85,000 joint salary selling the median home of $174,426 equals $259,426. Again dependent on equity the tax could be 43.8%.

Who is going to sell their home? Further, looking at commercial property and multi-family who is going to sell those properties? Those missing sales provide the catalyst for new homes and new commercial properties.

Real Estate and construction will die.