5 Ways to Protect Yourself From Coming Tax Hikes
“The tax man cometh,” says Jim Jubak at MSN Money. According to the IMF, we’re looking at 10 years of government tax increases. So it’s time to buckle in and prepare for it… because “tax increases from the federal government lag tax increases from the states. But that doesn’t mean they aren’t coming.”
Jubak, after considering factors like the stimulus as well as health and pension plan obligations, estimates taxes growing with “an average increase of $4,200 for each of the 100 million people in the U.S. who paid federal income taxes in 2005.” He recommends taking a defensive posture in terms of both taxes and investing in this environment by considering the following:
1. Try to get income sooner rather than later, in 2009 instead of 2011 for example, because taxes are likely to keep growing in the future.
2. When investing, consider that higher taxes will probably slow consumer spending and economic growth in developed countries.
3. The now-needy government is likely to start eyeing tax-advantaged retirement plans. If you’re a younger investor you may want to think how tax laws could change in the future. It may not be in your favor.
4. “Tax-your-neighbor” policies may increase, where taxing out-of-state-visitors or overseas investors is preferable to taxing the residents that vote in your own district.
5. Lastly, note the taxes on trading and investment strategies you consider. It’s already important now and could become more critical in a tax-heavy future.
Reade more details on MSN Money for Jubak’s perspective on the big tax squeeze coming.