Taxes! Up, Down or Sideways?
The federal, state, and local tax systems in the United States have been marked by significant changes over the years in response to changing circumstances and changes in the role of government. The types of taxes collected, their relative proportions, and the magnitudes of the revenues collected are all far different than they were 50 or 100 years ago. Some of these changes are traceable to specific historical events, such as a war or the passage of the 16th Amendment to the Constitution that granted the Congress the power to levy a tax on personal income. Other changes were more gradual, responding to changes in society, in our economy, and in the roles and responsibilities that government has taken unto itself.
I believe we have a huge crisis on our hands that will present itself over the course of the next several years and decades. As Ed Slott says, “The S.H.I.P. is going to hit the fan.”
Taxes in my opinion will be increasing and especially as the United States Government sees fit. The Baby Boomers will put tremendous economic strain on our Social Security System and who knows if it will survive as we know it today, or at all. The ever increasing costs of health care may lead to the government stepping in to assist. Where will this money come from? Perhaps more taxes? In our America today we also have a very real income tax situation on our hands that will need to be addressed. I mentioned the “S” (Social Security), the “H” (Healthcare crisis), the “I” (income tax dilemma) and almost lastly we have a “P” pension problem that like the dinosaur seems to be going extinct. The government will do what it deems necessary to address these 4 critical and pressing matters.
If this is not enough, I heard recently on National Public Radio that the war in Iraq has cost us well over $600 billion to date. This is a lot of money. Many of you may not be aware, but this $600 billion and rising cost has been borrowed! We as a country have financed this war, and at what cost? Taking into consideration the economics of the continuation of this war coupled with the S.H.I.P. hitting the fan, it is my firm belief that taxes have no where to go but up.
This is only my opinion and no one truly knows for sure what will be the true outcome for something in the future. However, there are many experts that share the same opinion as me.
So, if you believe taxes will be higher, you may be pondering the question “Are there proactive financial planning strategies that may be implemented to reduce future taxes or hedge the risk of increasing taxes to enable us to keep more of our hard-earned retirement money? You bet. I encourage you to call us today to schedule a complimentary quality financial check up.
Please consult a properly licensed tax professional or tax attorney for specific tax related questions. We are not tax advisors and the views expressed above are merely opinions.
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