Prepare for higher taxes
I do not have to tell you how much trouble our economy is in. We are seeing a time like not seen before since the Great Depression. In other words, all the way from the president to the Fed chairman to you and I, no one really has a clue about what is going on, what will work or not, and how to handle it.
There is something else to note. This is an election year and while I like the well thought out plan put forward by Democrat Senator Barack Obama, both candidates are offering to do way too many things on top of massive tax cuts. Now, as even a 6-year old can tell you, if less people work and most people sell stocks at a loss, not a lot of money will be sent to the IRS in the near future. That means lower revenues and if we continue to cut taxes and spend money on all kinds of programs, the government will go bankrupt.
Why will taxes rise?
Let’s be real here and put aside partisanship for a moment. First of all, most things being said right now are merely promises to win the election and may never happen. Still, the next president may want to do some things to keep his promise. The only way the US Government can remain solvent in the future is to raise taxes to makeup for the shortfall in revenue.
I am already budgeting for the next 5 years in a way that I can pay higher taxes (and if for some reason, I am wrong about my tax forecast, I will enjoy the money saved). In other words, I am cutting back right now and if I have more money in the bank, I can still enjoy living at least a comparable level of lifestyle even with higher taxes.
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