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Tax Hikes Coming

Tax hikes may be coming soon on the investment industry.

Starting Jan. 1, 2011, all tax rates and rules return to pre-Bush 2001 and 2003 Act law. That will be a huge amount of tax hikes and rule changes to digest. President Obama and other Democrats want to make Bush tax cuts permanent on all but the two-highest tax brackets, plus widen the third highest bracket too. That’s great for all income under $200,000 single and $250,000 married.

The Bush tax cuts are front and center on political battle-lines for the upcoming midterm elections. But that is just the starting point. The deficit commission reports in December 2010 and many Democrats and some economists are calling for higher taxes to help balance the out-of-control deficit, which has moved up the ladder to the being the biggest problem we face.

President Obama, Congressiona Democrats and populist forces are calling for tax increases on the following groups related to many traders and investment managers:
-Upper-income, by letting the Bush tax rates expire on the upper two brackets only;
-Investment income, with possible lapsing of the lower qualifying-dividends tax rate on the upper-two brackets too – losing the revised 20 percent rate and returning to the 36 and 39.6 percent ordinary tax rates;
-Investment income, with the new 3.8% Medicare tax effective in 2013 per the health care reform bill;
-Investment managers with the proposed but so far blocked repeal of carried-interest tax breaks;
-Professionals and small-businesses using the S-corp. structure, with the continued – but blocked each time – proposed repeal of self-employment (SE) tax breaks – this hurts investment management businesses collecting fees;
-Futures dealers with President Obama’s 2011 budget proposal to repeal lower 60/40 tax rates on dealers only;
-Big banks with the President’s proposed $90 billion bank “responsibility fee” (or tax related to TARP, even though most already repaid TARP with dividends).

Robert Green has written many blogs on the tax changes.
Click here
to see the Tax Changes section of our blog.
Robert has several Forbes blog versions of these blog articles too.

Robert Green covered Tax Changes often on his podcasts.
Click here to find 2010 and 2009 podcast archives.

Robert writes about tax changes in Green's 2010 Trader Tax Guide too.

 

     


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