We are all dealing with greater uncertainty than usual driven by questions like: How long will we be battling Covid-19? What will the economic impact be? How will the stock market perform? And will my kids ever go back to school?
Another worry that might not be on everyone’s radar is the likely increase in taxes that could occur as early as next year. But, unlike whether we will find a Covid vaccine or worrying about the stock market, this is an issue we have some control over. With some planning, we can take steps to mitigate the effects of future tax increases.
I raise this issue because it’s likely that taxes will rise if there’s a “blue wave” in which the Democrats win the presidency, House and Senate in November. However, even if there is no blue wave, given the state of our country’s finances, there is a very real possibility that taxes will increase – particularly for the wealthy – no matter which party prevails in November.
Because of the pandemic, the federal government is running higher deficits as a percentage of GDP than we’ve seen since World War II. Even before the pandemic, the government deficit was nearly $1 trillion a year. This fiscal year, the Congressional Budget Office projects the deficit will nearly quadruple to $3.7 trillion. At some point, regardless of which political party is in power, the U.S. government will need to raise revenue to stem the tide of red ink. As Stein’s Law states: “that which cannot go on forever must stop.”
Read more at Forbes…
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2020