By Doug Eaton
President Obama has been re-elected, and with that comes one certainty: There will be significant changes that will affect your financial future. In order to prepare and plan accordingly, it is important to understand how President Obama’s agenda will affect us when it comes to taxes, social security and healthcare.
This month, let’s talk taxes
Obama’s position on taxes is clear: Wealthy Americans should pay more to fund the US Government’s policies. For “high-income” individuals (people making more than $200,000 annually and married couples making more than $250,000) this means an end to the Bush-era tax cuts. Obama is also proposing:
• Increased tax rates for highest-income Americans: 33% bracket goes to 36% and 35% goes to 39.6%. This is about a 13% increase.
• Cap deductions and tax preferences at 28%… For example, if you are in a higher tax bracket, you may lose part of your mortgage deduction or other offsets.
• Replace the alternative minimum tax with the so-called “Buffett rule.” This is where individuals making over $1 million would be subject to a 30% effective tax rate.
• Raise tax rates on dividends and capital gains for high-income taxpayers to their ordinary income tax rate and 20%, respectively.
• Return the estate tax exemption to 2009’s level of $3.5 million, from $5 million, at a rate of 45%, from 35%.
• Apply Medicare taxes of 0.9% on earned income and 3.8% on investment income over high-income thresholds.
• Cut corporate tax rates to 28%, from 35%. Also, close yet unspecified deductions.
Take this opportunity to call your financial planner and discuss how these changes impact your personal financial situation. Next month we will take a look at financial implications of Obama’s proposed changes to the social security system.
Eaton Financial Group is a full service, fee-based financial advisory firm.
They focus on financial planning for the conservative investor.
(954) 575-9323