The Perfect Storm: Tax Cut Expiration and November Elections

1:40 pm Uncategorized

Americans battered and bruised by the economy over the past three years are pinning their hopes on November elections to incentivize lawmakers to extend the Bush tax cuts beyond their expiration date of 12-31-10.

Deloitte Tax LLP issued a report last week that outlines what will likely happen if Congress does nothing and the tax cuts expire:

For a family of four with a household income of $50,000, add another $2,900 to their tax bill.

For a family of four with a household income of $100,000, tack on another $4,500 in taxes.

For a family of four with a household income of $500,000, additional taxes add up to $10,800.

For a family of four with a household income of $1 million, get ready to pay another $53,200 in taxes.

The Obama administration wants to extend the cuts for households making less than $250,000 a year (and singles making less than $200,000).  They say only two percent of the population will be affected, and that two percent are the richest.  Plus, the Treasury desperately needs the additional $700 billion that taxing the wealthy will bring in.

House Republican leadership wants to extend the tax cuts across the board for two years, then phase in taxing the top two percent more.  Reportedly, House Democrats are warming to this idea as the November elections loom and an angry electorate gets increasingly vocal about their opposition to any tax increase.

Whatever the elections hold, you should elect to consult with our California estate planning law firm about asset protection and wealth preservation.

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