Middle-Class Taxpayers May Have Skirted The Worst Tax Increases Now But Tax Creep Will Make Them Subject If Two Stealth Taxes Are Left Intact

Wednesday, February 27, 2013 08:53
edit
Middle-Class Taxpayers May Have Skirted The Worst Tax Increases Now But Tax Creep Will Make Them Subject If Two Stealth Taxes Are Left Intact

Tags: new tax rules | social security | Taxes

Middle-class taxpayers may have skirted the tax increases of the fiscal cliff but two stealth tax hikes will surely affect them if left unchecked.
 
The .9% surcharge on earnings over the $200,000 annual salary threshold and the 3.8%
Medicare surtax on investment income for those earning higher than threshold salaries could easily affect middle-classers as inflation boosts incomes.

This Website Is For Financial Professionals Only


 
Just like the AMT, the threshold will creep down to middle-class earners over time if it is not indexed to inflation.
 
The other tax middle-classers will become subject to is the 50% income tax on Social Security benefits.
 
Twenty years ago, the threshold for paying this tax was pretty high, subjecting only about 15% of taxpayers.
 
Today, that percentage is more like 35%. Incomes have risen significantly since 1984 when the original thresholds of $25,000 for single taxpayers and $32,000 for married taxpayers were set.
 
If neither of these tax thresholds become indexed to inflation, they will become an additional tax sweep over taxpayers who were never intended to become subject to them.

It's a good idea to begin talking to your clients now and adjusting their investment strategies to prepare for this possibility down the road.

Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

busy