Congratulations to Barack Obama for winning the office of the most important and powerful person in the world. He wasn’t who I voted for, but it is truly a historic time to be alive to see the first African-American president of the United States. I know that one issue many are concerned about when it comes to Obama is his tax plan. Here is a good snapshot from Kiplinger’s magazine about what he plans to do with taxes.
Maintain current tax rates of 10% to 28% for most Americans. Reinstate top tax rates of 36% and 39.6% on joint income of more than $250,000 ($200,000 for individuals).
Maintain maximum rate of 15% for most taxpayers. Boost top rate to 20% for investors with income of more than $250,000. Under current law, taxpayers in the two lowest income-tax brackets pay zero capital gains in 2008, 2009 and 2010. Eliminate capital-gains taxes on start-ups and small businesses to encourage innovation.
Suspend mandatory distributions for those 70 and older. Permit taxpayers to withdraw up to $10,000 from retirement accounts penalty-free; withdrawals would still be subject to income taxes.
New Tax Cuts
Tax credit of up $1,000 to offset Social Security taxes for low-wage earners. Eliminate income tax for seniors making less than $50,000. Double the tax credit for college expenses to $4,000. Create a 10% mortgage tax credit for those who don’t itemize. Provide a $1,000 rebate funded by a windfall-profits tax on oil companies to offset high energy costs.
Maintain current exemption and index to inflation.
Set exclusion at $3.5 million per person ($7 million per couple); keep rate at 45%.
Maintain current wage base of $106,800, indexed for inflation. Impose additional tax of 2% to 4% paid by employers and employees on earnings exceeding $250,000 — but delay implementation for at least ten years.
Keep top rate at 35%; close corporate loopholes.
I am a little concerned that his plan to raise taxes on people making over $250k a year is that it will affect small business owners. Also, I am conceld rned that he might raise taxes on corporations, which would force them to pass that tax increase on to the consumer. But, he does have a good plan to help senior citizens and protect lower income earners, which will give them a chance to improve their financial status. However, remember that a $1,000 handout does nothing for you if you don’t use it wisely. If you continue to consume rather than invest and pay off debt, you will never get ahead with your finances. We need to remember that a new president won’t solve all of our problems. If you want to get ahead with your finances, it starts with you. Take the personal responsibility to make yourself a better person and better your financial life. Obama won’t make you wealthy, only you can make you wealthy.