YES! So get ready.
Taxes are hitting the news everywhere and not just because your tax return is due this week.
- Tax Freedom Day comes early: "Tax Freedom Day: Real Or Imagined?"
- Fox Business asks, "2009 Tax Season: Last Good Year for High-Earning Americans?"
- Paul Volker thinks taxes should be raised: "Volcker: Taxes likely to rise eventually to tame deficit"
- Bernanke thinks taxes may have to be raised: "Federal Reserve Chairman Ben Bernanke sounds a warning on growing deficit" and "US faces 'difficult' tax choices: Bernanke"
- Some wealthy families want higher taxes: "Pigott among wealthy Americans asking to pay more taxes", "Millionaires to Congress: Tax Us!", and "Some Wealthy Say: Go Ahead, Tax Me More"
- More want to let the Bush tax cuts expire and expand the estate tax: "After Years of Tax Breaks, Some Wealthy Willing to Pay Their Share"
- But it wont be enough: "Can we close the budget deficit by taxing the rich?"
- Should we consider alternative taxes?: "With VAT Tax on the Table, Progressives Sound Alarm" and "Flat tax yields productivity"
- States are also raising taxes: "Lawmakers end session with taxes, service cuts"
What does all this mean? As a tax planner my response is simple. Taxes will be rising.
We know that President Obama has advocated rolling back the Bush tax cuts on high wage earners since his Presidential campaign. The new health bill goes beyond that with an additional surtax. The deficit needs to be addressed and President Obama has created a commission to do that. All of that is before the President moves forward on any of his other programs. Realistically, taxes will need to be raised more broadly than the President has already endorsed to pay for all of this.
However, any tax increases (other than allowing the Bush tax cuts to expire) will require congressional action. All of the House members and a third of the Senators face election this fall. Articles like the ones above, the Tea Party movement and the counter Coffee Party are likely to elevate tax policy in congressional elections.
I think the issue I have been following since I started this blog, the Federal Estate Tax, is going to be swept up into this debate. Ultimately, to fix the estate tax we are going to need the House, Senate, and President to agree to a tax cut at the same time they will be struggling with the need for additional tax increases. For updates on Estate Tax legislation, I suggest you check out Hani Sarji's blog.