The debt crisis that the US Government and individuals face is a pressing issue. This crisis needs to be confronted for the financial health of the United States. We complain about taxes now… they could get a whole lot worse.
David Walker, President and CEO of the Peter G. Peterson Foundation and former comptroller general of the United States, believes that by 2030, without significant reforms to our government programs and policies, federal taxes could double from current levels.
The Congressional Budget Office (CBO) projects that, as the economy recovers, revenues under current law will increase over the next couple of years, reaching about 18 percent of GDP in 2024. Individual income taxes and social insurance taxes (largely social security payroll taxes) account for most of federal government revenue.
In its latest long-term budget outlook (July 2014), the Congressional Budget Office (CBO) projects that, within 25 years, federal debt held by the public would rise under current law to 106 percent of GDP and to 183 percent of GDP under less optimistic assumptions. Debt at those levels would put our economic future at risk.
The US Debt is over 18 trillion dollars and is on an unsustainable path. According to the CBO, our high levels of debt will rise significantly over the next 25 years.
So what can you do about this? Prepare now by doing proactive tax planning to provide for a more secure future. The maximum federal tax bracket today is 39.6%. In the past there has been a time when the maximum tax bracket was 94%! The entire decade of the 70’s the maximum tax bracket was 70%.
Would you rather pay tax on the harvest or the seed? A Roth investment allows you to pay tax on the seed (the contribution) and reap the bounties (the contribution plus growth/interest) tax-free. If you are able to contribute to a Roth IRA, or a Roth 401(k) or Roth TSP, take advantage of it!
As we approach April 15th, taxes become even more pressing of an issue. That is why we chose this time of year to have the ”Tax Savvy Awareness Campaign”. Tell us what you are doing to be Tax Savvy. What are you doing today that will shelter you from the threat of higher taxes in the future! By sharing with us what you are doing, you will receive the just published, ”2015 Tax Planning Chart Pack” in electronic format published by Ed Slott’s IRA and Company. In addition, you will be entered into a drawing to win a Vizio 28″ LED Smart TV! The winner will be announced on Monday, April 16th.
Tell us: Are you making contributions to a Roth IRA? Have you attended the “Tax Savvy Planning for a Sound Retirement” workshop? Have you done or are you planning to do a Roth Conversion? Have you done a Roth Conversion Analysis? Have you requested the white paper “To Convert or Not to Convert in 5 Easy Steps”. We want to know! We will share what your ideas and what you are doing so that we can all be a little more tax savvy!
– Carol Schmidlin, President and Founder of FedSavvy
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