Tax Predictions--2009

Forbes Tax Revolt article

Not surprisingly, rumors and projections of 2009 tax legislation have started. US News insider James Pethokoukis claims a payroll tax credit for low income taxpayers could cause the top marginal tax rate to approach 45% and Rich Kaarlgard of Forbes predicts that eventual inflation, the sunseting of Bush tax cuts and the $250,000 income tax rate increases could produce a suburban tax revolt to accrue to the favor of the 2012 GOP nominee. While my guess is that the US News story is a Democratic trial balloon of sorts and Kaarlgard could be a Republican nightmare/fantasy; I certainly don't expect the next year to be quiet on the tax front.

A few of my predictions for next year: The Democrats will either eliminate the AMT OR effectively make sure that no one with adjusted AGI under $200,000 is affected; the maximum income for OASDI (or Social Security) will increase to at least $250K and the ceiling may be eliminated entirely a la Medicare; Obama will not be able to cut taxes to $250 K; instead, only those earning under $120,000 if MFJ ($60 if MFS, $90 if single, $105 K if HoH) will get tax cuts. Going forward to 2010, assuming some improvement in the economy, tax rates will be increased, not at $250K, but at about $180K ($90 for MFS, $135 for single, $160 for HoH). Two other predictions: the Bush tax cuts for estate and other taxes will be allowed to lapse in 2010 and gay couples will get some explicit recognition: one possibility is expanded availability of Head of Household (HoH) status for gays/lesbians living in civil unions.