On December 31 the tax cuts across the board (which where implemented in 2001, while George W. Bush was president) will expire and rates will rise on almost every tax level on almost every type of tax and every type of income earned. Also, as part of a budgetary settlement between the parties, there is a requirement that if a new tax code is not agreed upon both by the White House by Congress there will be large across the board percentage cuts to entitlements. There is a concern among some circles that this will cause another recession. Others believe that increased taxes and reduced entitlements will help the government in the long run. The theory is that it is a hard remedy, but forces something to happen which the parties have been unable to do since our great recession started in 2008.
Some prognosticators believe that there will be another “Patch” that will extend the tax cuts and everything for one more year. The theory being that it will give the parties time to negotiate a settlement. So far no one has been willing to do that hard work. Also there is some thought that “The Simpson and Bowles Commission” recommendations will be implemented. This was put together from both sides trying to come up with a compromise that might work. That is being seriously looked at for the first time. It was discarded after it first came out, as neither side wanted to give any concessions from their point of view.
Any resolutions can be a combination of the two. Taxes will go up and entitlements will be cut. There has to be a combination of more money coming in and less money going out to head in the right direction. Also, any such movement will give more confidence to the world; particularly, China and Europe to show that we are actually going to do something this time as opposed to doing nothing. It will be interesting to see. There will be changes a coming.
At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.