Upper-Income Taxpayers Look for Ways to Sidestep Obama Tax-Hike Plan

Dr. Sharon Poczatek, who runs her own dental practice in Boulder, Colo., said that she too is trying to figure out ways to get out of paying the taxes proposed in Obama's plan.

"I've put thought into how to get under $250,000," said Poczatek. "It would mean working fewer days which means having fewer employees, seeing fewer patients and taking time off."

"Generally it means being less productive," she said.

Poczatek argued that by reducing her income from her current $320,000 to under $250,000 by having her dental hygienist work fewer days and byl treating fewer patients, she would avoid paying higher taxes on the $70,000 that would be subject to increased taxation if Obama's proposal is signed into law.

Additionally, any interest from a checking or savings account or capital gains from stocks, would also count as taxable income.

"The motivation for a lot of people like me -- dentists, entrepreneurs, lawyers -- is that the more you work the more money you make," said Poczatek. "But if I'm going to be working just to give it back to the government -- it's de-motivating and demoralizing."

Can Obama's Tax Plan Be Gamed?

Schatsky did say that there are several commonly used techniques tax payers use to fall into a particular tax bracket.

"It's very possible that there are plenty of things you can do with general tax planning techniques – attempting to recognize loses, pushing gains to years when your income is lower and increasing retirement plan contributions – to come below $250,000," said Schatsky.

"But Obama's proposal has yet to be hammered out and the devil is in the details," he added.

So far, Obama's proposal does outline new limits on tax deducations for families earning more than $250,000, including those on charitable donations, mortgage interest and state and local taxes.

Additionally, Obama said that the elimination of tax cuts for the wealthiest Americans will benefit 95 percent of working families.

Because we have a marginal tax system, said Schatsky, what Obama's plan means is that the amount of tax you pay on each incremental dollar is higher only when your income is pushed into a higher tax bracket.

Schatsky said that the incentive to get under $250,000 may be more so if the tax plan outlines that an individual who goes over a prescribed limit would face a reduced value of their itemized deductions.

"If the value of all your itemized deductions goes from a 33 percent level to a 28 percent level than there would be a reason for people to do dramatic things to reduce their incomes," said Schatsky.

Peter Morici, a professor of business at The Robert H. Smith School of Business at the University of Maryland, agrees that while it may be possible to sneak around the taxes, it won't be as simple as some may think.

"You have to be pretty close to $250,000 in terms of your income to get underneath it," said Morici.

Does Obama Tax Plan Promote Class Warfare?

Morici says that he believes Obama's tax proposal could spark a kind of class war. "What Obama is doing is pitting the poor against the upper middle class," said Morici. "He'll tax the rich for the health benefits everyone else wants."

Obama has said the new taxes on those making over $250,000 would go toward a fund that would support a gradual move to universal health care coverage.

Supporters of Obama's budget plans say that those who are at the top and complaining need to look at the bigger picture.

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