So you went and did America. You voted for Barack Obama. All of that "Change" and "Hope" talk snowed you, didn't it?
Well guess what? Starting with the new Democrat congress and Obama in the White House, taxes are going to skyrocket! One of the first things on the agenda will be allowing what was known as the Bush tax cuts to expire. That is an instant tax increase on all tax payers.
We also know that Congress and President-elect Obama are going to raise income taxes on anybody making $250,000, no wait, $200,000, nope, its $150,000, ok, just everybody. The tax increase that is really going to hurt the US economy is the capital gains tax.
Captial gains tax is a tax on the increase in investments. For simplicity sake, if your investment earns $100, current tax law takes $25. In percentage terms, if your investment earns 8%, your actual return is 6%, after taxes. President-elect Obama plans to raise that rate to 35%, thus making that $100 gain worth $65, or that 8% gain is really 5.2%. Will triple tax-free bonds become more popular?
What that really means is that folks will reconsider investing that next dollar, as the tax hit may not be worth it. Additionally, if companies have investment gains outside of the US, they won't repatriate that money because it will wipe out their investment returns. Without money to improve the business, or pay dividends, the economy begins to sputter. Considering the current state of the global economy, ANY tax plan that increases the burden on individuals or corporations is both dangerous and foolish. But don't blame me, I voted for McCain. Rant over.