Under the current tax code, there are negative ramifications when married couples work. That is, they typically face a higher tax schedule a phase-out of certain deductions and credits.
Yes, at least from a tax perspective, they would be better off separating their incomes and filing individually. Unfortunately, that is not an option under the code, and these dual working married couples end up paying more tax. But according to two economists, it does not have to be that way.
Melissa Kearney and Lesley Turner propose a new tax deduction for dual-income families. The deduction would allow them to deduct 20% of the first $60,000 in secondary earnings. There would be some phaseouts and exemptions, but generally speaking, the effect of the proposal, if implemented, would be to raise the take home pay to 34-35% of the secondary earners income, increasing the household’s disposable income by more than $1,000. All in all, we like it!
The U.S. Supreme Court ruled on Monday that it will leave it to Congress to settle the question of online sales tax collection. Brick-and-mortar retailers contend that because their online competitors are not required to collect sales tax on internet sales, they are placed at at a disadvantage to online giants such as Amazon.com and Overstock.com. Quite frankly, it is difficult to argue agains brick-and-mortar companies in this regard because sales tax can be as much as 9% of a sales price. Very simply, removing the tax means a lower price, but the question is whether states have authority to enforce non-resident, out-of-state companies to collect sales tax on sales generated in that state.
The New York Court of Appeals upheld the collection of sales tax for online purchases made in the state of New York, even if the online company does not have a physical presence in the state. The ruling seems to stand in contrast with the Supreme Court’s own ruling in 1992 in which the Court ruled that sales tax need only be collected if a business has a physical presence in the state.
In response to the NY Court’s ruling, Overstock.com and Amazon.com petitioned the U.S. Supreme Court to address the disparity. Now that the U.S. Supreme Court has declined those petitions, it is left to Congress to address the issue.