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Missed Fortune – Higher Taxes Won’t Just Hit the Rich

Posted on | December 16, 2012

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Protecting Yourself Is No Cause for Shame

For a great number of Americans, the prospect of dramatically rising taxes is causing a lot of confusion over what they can and should do about it. Before examining our options, let’s be perfectly clear; paying taxes is a part of the responsibilities of being a citizen.

But there are legitimate avenues by which the IRS code allows us to redirect otherwise payable taxes into causes that we wish to support instead of simply rolling over and paying unnecessary taxes. By redirecting those unnecessary taxes you can take greater responsibility for your own future rather than depending upon the government to take care of you through Social Security and Medicare.

When redirecting those otherwise payable taxes, we don’t want to put that money into tax-deferred vehicles like IRAs and 401(k)s. Folks who save for retirement in tax-deferred accounts are going to kick themselves at some point down the road.

One big reason they’ll kick themselves is that they’re not going to be in a lower tax bracket when they retire. The idea that they’ll be in a lower tax bracket is no longer axiomatic due to their having less deductions and higher tax rates.

Thankfully, there are many folks who are feeling the need to protect their serious money by getting it out of those IRAs and 401(k)s while tax rates are lower. This is also true of those who have their retirement money in pensions and profit-sharing plans or in real estate holdings such as duplexes, rental homes, commercial buildings, or apartment complexes.

Now is the time to get that money into a tax-free vehicle where they can recoup any loses and put the power of compounding to work for them.

With income and capital gains taxes poised to go higher, this is not something to procrastinate.

All the Right Moves

Capital gains taxes are poised to jump from 15% to 20-30% or more. With income tax poised to go up as well, there’s no point in deferring your taxes to some perceived future advantage that almost certainly won’t be working in your favor.

We want to get our money out of these tax-deferred vehicles, get the taxes over and done with and move with confidence toward a future where our money is accumulating tax-free.

If the Bush tax cuts are allowed to expire at the end of this year, it won’t just be the wealthiest Americans who will feel the impact of those higher taxes. A single person earning over $35,000 will see their tax rates jump from 25% to 28%. After the first $17,000, a married couple earning over $70,700 and filing jointly will see their taxes rise from 10% to 15%.

There’s no evidence that Congress will be giving the lower and middle-income earners a break. Even more importantly, the job providers will be less likely to expand their businesses and create new jobs meaning that unemployment will continue to stay high. The ones who are responsible for generating most of the tax revenue for the government are squarely in the crosshairs and this is a huge disincentive for them to stimulate the economy.

This means that we’ll likely experience a double dip recession and continued economic uncertainty.

It’s never been more important than right now to learn why tax deferral is not a smart thing to do. Higher taxes, combined with rising inflation and continued market volatility and economic uncertainty are setting the stage for a triple whammy that will be a rude awakening for many.

This is why it is essential that you learn and use the Missed Fortune strategies that will teach you how to take ownership of your future by positioning your retirement money where it grows safely and tax-free. The only thing holding most people back at this point is that they don’t know what they don’t know.

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*Life insurance policies are not investments and, accordingly, should not be purchased as an investment

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