During these difficult economic times when our leaders are engaging in class warfare and attacking the top “1 percent” all Americans should be informed about federal taxes.  A good start is the information show in the 21 charts depicted on the two articles linked to below.

The Atlantic:  “If you care about national values, or the relationship of citizens to their government, or the way we choose to award and discourage behavior, there is nowhere better to start than the gnarled and fascinating world of levies and tax breaks. Tax week gives American families a reason to consider moving to Bermuda, but it also gives me an excuse to spend the day finding my favorite, most controversial, and most illuminating graphs about taxes. Here they are.”

See also “Top Ten Federal Tax Charts.”

Smart Money:  “Unless Congress takes action, the top tax rate for the highest earners on most dividends, currently 15%, is set to jump to a whopping 43.4% next year. That is a maximum income-tax rate of 39.6% — since dividends ll once again be taxed as regular income — plus a 3.8% tax on investment income as part of the health-care overhaul passed in 2009.”

New York Times:  “Legislation meant to help the United States government locate overseas assets of American tax cheats created little stir when it was quietly slipped into a jobs bill last year  But the Foreign Account Tax Compliance Act, or Fatca, as it is known, is now causing alarm among businesses outside the United States that fear they will have to spend billions of dollars a year to meet the greatly increased reporting burdens, starting in 2013. American expatriates also say the new filing demands are daunting and overblown. . . . ‘The Fatca story is really kind of insane.’ . . .

The law is meant to ensure Americans cannot use hidden trusts overseas to evade taxes, a goal that is widely applauded. But critics say that it amounts to gross legislative overreach, and that the $8 billion the Treasury expects to reap in taxes owed over 10 years pales next to the costs it will impose on foreign institutions. Those entities are being asked, in effect, to pay for the cost of tracking down American tax evaders.

The law demands that virtually every financial firm outside the United States and any foreign company in which Americans are beneficial owners must register with the Internal Revenue Service, check existing accounts in search of Americans and annually declare their compliance.”

Summary of Key FATCA Provisions

The Foreign Account Tax Compliance Act (FATCA), enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, is an important development in U.S. efforts to combat tax evasion by U.S. persons holding investments in offshore accounts.

Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS. In addition, FATCA will require foreign financial institutions to report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

Reporting by U.S. Taxpayers Holding Foreign Financial Assets

FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return. Reporting applies for assets held in taxable years beginning after March 18, 2010. For most taxpayers this will be the 2011 tax return they file during the 2012 tax filing season. Failure to report foreign financial assets on Form 8938 will result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.

Reporting by Foreign Financial Institutions

FATCA will also require foreign financial institutions (“FFIs”) to report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. To properly comply with these new reporting requirements, an FFI will have to enter into a special agreement with the IRS by June 30, 2013. Under this agreement a “participating” FFI will be obligated to:

(1) undertake certain identification and due diligence procedures with respect to its accountholders;

(2) report annually to the IRS on its accountholders who are U.S. persons or foreign entities with substantial U.S. ownership; and

(3) withhold and pay over to the IRS 30-percent of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate U.S. source income, made to (a) non-participating FFIs, (b) individual accountholders failing to provide sufficient information to determine whether or not they are a U.S. person, or (c) foreign entity accountholders failing to provide sufficient information about the identity of its substantial U.S. owners.

Notice 2011-53 provides the phased-in timeline of key FATCA implementation dates for FFIs. It is important to note that many details of the new reporting and withholding requirements pertaining to FFIs must be developed through Treasury regulations that are expected to be proposed by December 31, 2011. Published IRS Notices accessible from this FATCA internet site provide currently available information and guidance.

To learn more about this nighmarish law go to the IRS page called “Foreign Account Tax Compliance Act (FATCA).”

Wall Street Journal: Here is one surprise benefit of low interest rates: They can help reduce taxes.

Every month, the Internal Revenue Service resets the interest rates it allows for private loans and various estate-planning transactions carried out that month. The rates for October, issued Sept. 19, are the lowest on record.

The new short-term rate (less than three years) is 0.16%, down from 0.26% in September. The midterm rate (three to nine years) is 1.19%, down from 1.63%, while the long-term rate is 2.95%, down from 3.57%. A blended rate that applies to some estate-planning techniques is 1.4%, down from 2%.

The resets can be a boon to taxpayers looking to make lemonade out of the current low-rate environment. “The opportunity is tremendous for wealth transfer, especially with asset values low,” says Richard Behrendt, a former IRS estate-tax specialist now with Robert W. Baird & Co. in Milwaukee.

For example, low interest rates make intrafamily loans especially attractive. “It’s a wonderful time to lend to a child, say, to buy a house,” says Carol Harrington, an attorney at McDermott, Will & Emery in Chicago.