A lot of people send me emails that say things like "Congress should just stay home and not do anything the rest of the year." Well, if that happens in 2010, your federal taxes are going up.
As we discussed yesterday, a series of tax cuts enacted during the Bush Administration will expire and revert to higher levels on January 1, 2011, unless the Congress moves to make changes.
What kind of tax increases would occur if Congress is unable to act?
* Individual tax rates would go back to their levels before 2001
* The lowest 10% rate would be abolished
* The size of the 15% bracket would shrink in half
* The 25% rate would increase to 28%
* The 28% rate would increase to 31%
* The 33% rate would increase to 36%
* The top income tax rate would again be at 39.6%
And there are other provisions that will change next year, like a dramatic increase in federal inheritance taxes, which in 2010 are not being taxed at all.
So if your rich Uncle dies right now, it's much better than dying on January 1 of next year, when a 55% tax rate kicks in.
Remember, all of these taxes go up in 2011, even if Congress does nothing.
That might produce some interesting political battles later this year, as Democrats have made clear action is not likely until after the November elections.
A lot of people send me emails that say things like "Congress should just stay home and not do anything the rest of the year." Well, if that happens in 2010, your federal taxes are going up. As we discussed yesterday, a series of tax cuts enacted during the Bush ...