As We See It
Taxes, Taxes Everywhere
As we go to press, tax issues permeate the entire popular press, talk shows and radio. With the passing of the Stimulus Bill taxpayers breathed a little easier with the hope that relief was in the air. However, the President’s proposed tax hike for higher-income taxpayers and Congress’ aim at bonuses paid by federally-bailed out companies has put taxes in the spotlight and has taxpayers once again nervous about increased taxes.
As we see it, the populist outcry to “tax the rich” and enact “millionaire’s taxes” to raise revenue is not surprising. The current state of the economy and unemployment levels have our leaders rethinking rates, current tax benefits, deductions and credits. An example is the House’s approval on March 19 of a bill that would impose a 90-percent personal income tax on employee bonuses paid by companies that received federal bailout money. It's curious to see that Congress passes the bail-out bill without limiting the bonuses and then turns around and proposes excise taxes to cure a potential perceived oversight. Probably not the best tax policy. In what form some or all of these provisions make it into law is uncertain. What is certain is that changes to the existing tax law are coming and taxpayers should prepare accordingly.
In addition to federal changes, many states have also proposed significant increases to individual income taxes. We should soon know the outcome, as many state legislatures will conclude tax bills prior to June 30th. However, it is not a consequence-free environment for the legislatures and regulators. Ultra wealthy, ultra mobile taxpayers may choose to move to more tax hospitable jurisdictions, particularly Florida, Nevada, Texas or New Hampshire. If they are not able to move themselves, they may be able to move trusts or other investment vehicles out of high rate states.
Overall, taxes are in the forefront. Knowledge of the proposed changes and proactive planning are the best ways to stay ahead of the changes and not be caught picking up the pieces after the fact. If you don't like the news coming out of the federal or your particular state legislature, contact us at WTAS and we may be able to help you sort out your alternatives.
