We hear the Democrats demand that taxes on the rich raise 'just slightly', to make things more fair. All they publicize is that it's a tiny increase in the upper tax rate, allowing the Bush tax cuts for the rich to expire. They try to convince us its not really a tax increase, its just a return from the temporary rate Bush imposed on us.
Well, the income tax rate is only a small part of what they are after under 'just slightly', and few people realize they are going to be affected - whether they are rich or not.
1) The capital gains tax rate is also part of the Bush cuts Democrats want to expire. Currently at 15%, Dems want it to be at least doubled, if not tripled. Taxes placed on Capital Gains are levied against how much money your investments make. Stocks, Mutual Funds, etc ... any investment that produces a profit is a target for this tax, no matter how much money you make in salary. Even if you only make 20,000 a year, if you have investments they will be hit by the Capital Gains tax increase.
Democrats are going bleed your retirement accounts, its that simple.
The realization of this is why the stock market experienced a huge loss on Wednesday - people already had a plan in place to sell off stocks as soon as possible if Obama won, in order to take their profits before the huge increase in the Capital Gains tax rate.
2) Part of the expiration of the Bush cuts for the rich includes reinstatement of the Death Tax. If your estate is above a certain value, Democrats will take 55% of your estate when you die. 45% will be left to your heirs.
How do you like that? Those of us who have been successful and want to pass along the fruits of our success to our children will see that gift cut by more than half. Democrats see absolutely nothing wrong with this, and can't understand why anyone would object. You can see it in their leaders when they reluctantly talk about it - its no big deal to them, so shouldn't be a big deal to us.
The only thing being discussed is the threshold for the confiscatory 55% theft. They just have to decide how big the estate has to be to trigger the grab - I've heard numbers anywhere from 500,000 to 3 million.
This will hit small business owners especially hard. If the estate consists of hard assets (like a business) instead of cash, the tax will be levied against the value of the entire estate, including the hard assets. As an example, if you have a business that is valued at 5 million dollars and want to leave it to your kids, they will have to come up with 2,750,000 in cash to give to the government in order to keep the business. If they can't come up with that, the government will sieze the business, sell it, take their 2,750,000, and then give anything that is left to the heirs.
I heard a frightening real world example of this when George Steinbrenner passed away. If the Death Tax was active when he died, his kids would have had to give the government about $400,000,000 in order to keep ownership of the NY Yankees.
If you have any kind of investments or retirement accounts, or anything resembling a decent sized estate to pass on, you need to be talking to your financial and tax advisors right now. If the only thing standing in the way of an agreement that will stave off the financial armageddon that awaits us on January 1 is these 'tiny' tax hikes on the rich, then I can guarantee you that Republicans will cave and give Obama what he wants.