Tax Increase is Coming
The largest tax increase in history is expected to hit us on January 1, 2013. uncertainty is the name of the game in politics. It’s killing business. There is one thing that is certain however. If something doesn’t change quick,
Yes, ObamaCare is huge, but when you couple it with the expiring tax laws, you will be brought to your knees. Every household in the United States will be facing an average of $3,800 in extra tax next year. By the way, that does not include any of the health care penalties people will get hit with when they don’t buy the right insurance.
Tax on the Middle Class
I know that you aren’t the “average household” in the United States. You may not think you are rich, but your chances of having to pay the alternative minimum tax are pretty good. Seventy percent of the over $500 billion in extra taxes due in just 2013 will be paid by the middle and low-income families.
The politicians are screaming to tax the rich, and they are smirking behind your back, because they know you’re going to get killed next year. The tax will directly affect your paycheck every time. You will see an immediate drop in your take-home pay.
The child tax credits will be cut in half, the lowest tax rate will not be 10% anymore, and more people will be included on the tax rolls.
Die this year, not next year. Now you can die and pass $5 million without a federal estate tax. If you die after December 31, you’ll only get to pass $1 million to your family without a federal estate tax. The tax will start at 45% and quickly move up to 55%.
The 3.8% Passive Income Tax
A 3.8% health care surtax will be placed on ALL investment income if your adjusted gross income is over $250,000 for couples. You just dismissed that tax, because you don’t make over $250,000. Not so fast.
The tax may not apply today, but it will in the future. With inflation, your money won’t be worth as much, and your salary will have to increase if you are going to survive. That means technically you make more (maybe over $250,000?). Ok, let’s assume your salary will never hit $250,000. You’re still not home free.
I am worried about the politicians lying to me. When the income tax was instituted in 1913, it came in at only 8.5%. The President and Congress in 1913 swore that it would never go up. Within four (4) years the income tax hit 70% (seventy percent) for the highest income tax bracket.
The next step in the current tax strategy is to lower the $250,000 threshold. It’s easy to see that one coming! And, it’s easy to do, because that’s not even a new tax. Congress won’t even have to debate it.
Kick the Can Down the Road
I don’t see Congress, and I certainly don’t see the current President, worrying about the tax issues between now and 2013. They’re all worried about campaigning. There will be lots of name calling and finger pointing.
I did love the President’s statement on April 10th that prosperity comes from the poor. It doesn’t trickle down from the rich. (He actually said, “Prosperity has always come from the bottom up.”) If he can tax the top half, he’ll get the vote of the bottom half. My students aren’t in the bottom half. Beware!
Remember, the IRS is the major threat to your wealth. It’s your biggest asset protection problem you have by a factor of ten.
Democrat or Republican – it doesn’t matter –we just need to get people in Washington that understand our need for tax relief. By tax relief, I don’t mean lower the taxes we have today. Our taxes are basically very low today, but they won’t be for long unless we get the relief I am talking about.
One of the principal causes of the Great Depression was a huge tax hike from the relatively low rates enjoyed in the Roaring 20s. What will the 2013 tax hikes (many are the lapse of the Bush tax cuts) plus the huge burden coming with ObamaCare do to our fragile economy?
In the next few weeks, I’ll give you a number of tax tips that will help this year. Enjoy the year. 2013 is set to be really bad, unless you make enough noise to change the current course in Congress.
Get my 10 Tax Tips NOW and hunker down for the battle.