Tax time can be stressful for those who end up owing the government money, especially those in dire financial straights or recovering from a recent bankruptcy filing.

The Associated Press reports that President Obama has proposed new taxes that would both create incentives for companies to hire new workers and increase the amount of money paid by America’s wealthy. Here’s a look at some of the specific changes the president has so far suggested.

Taxes & Breaks for Businesses

As it now stands, the Obama Administration’s tax plan would include the following changes to tax requirements for businesses, including:

• A $5,000 tax break for each new employee hired
• Reimbursement from the government for extra Social Security taxes paid by companies that increase employees’ wages or hours worked
• Increases in taxes for companies with large overseas operations
• Elimination of certain tax exemptions for coal, oil and gas companies
• Introduction of a financial crisis responsibility fee on major financial institutions

While these moves are apparently intended to promote hiring and working hours for Americans, they also come with a considerable price tag for the government. And the measures that raise costs for big business have congressional Republicans balking already.

Further, any new tax plan must pass through both houses of Congress before being implemented.

Taxes & Breaks for Individuals and Families

Obama has reportedly claimed that, because of the dire financial straits in which our nation finds itself, continuing tax cuts for wealthy individuals and families is something we simply cannot afford.

His proposed changes to the tax code would include:

• Extending through 2011 the Making Work Pay tax credit, which would mean an extra $400 for low-income individuals and $800 for low-income families per year
• Eliminating tax breaks on individuals earning more than $200,000 and families earning more than $250,000 annually
• Making permanent the Earned Income Tax Credit, geared toward eliminating poverty and aimed at low-income families with three or more children
• Increasing the top two individual tax rates (from 33 percent to 36 percent and from 35 percent to 39.6 percent)
• Restricting some tax deductions the wealthy can claim on their taxes
• Increasing top capital gains taxes for individuals
• Repealing a law that taxes personal use of company-issued cell phones and other electronics

The various measures are geared toward increasing revenue for the government and alleviating tax burdens for those least able to pay as part of whittling down the nation’s debt, which has swelled significantly in recent months.

Additional Resources

http://www.irs.gov/taxtopics/tc600.html