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What Tuesday's Election Results Mean for Your Taxes

First, a HT to Paul Caron, tax law prof at the University of Cincinnati, and editor of Tax Prof Blog for pulling together more than a dozen articles on taxes and Tuesday’s election.

Carla Fried is the author of one of those articles, writing at CBSMoneyWatch.com an article entitled “What the Republican Mid-Term Win Means for Your Taxes.” She begins with the general statement:

“In all likelihood, the Republican party triumph in Tuesday’s mid-term elections means no American household — not even those with income above $250,000 — will see their federal income tax rates and investment tax rates change in 2011, and possibly not in 2012, either. With the shift in Washington’s balance of power, it’s expected that the current tax rates that are scheduled to expire at the end of this year will be extended for everyone, regardless of income, for at least a year. But getting the tax debate resolved could end up being a messy process that will give us all some tax headaches along the way.”

She then goes on to comment on several specific issues, which you can read at her blog, linked above:

  • The Obama administration will punt — for now — on its plan to raise taxes for the wealthy.
  • There could be a short-term hiccup of higher taxes for everyone in January.
  • The definition of “middle class” could change.
  • Taxes on investment gains likely aren’t going anywhere.
  • One change Congress will likely address is the estate tax.The short and long view for you and your taxes.

Included in that last point is this warning:

“Longer-term there is plenty to be worried about. While there seems to a growing consensus that the economy is too fragile to impose tax hikes at this juncture, what might be good for the patient over the next year or two could kill it 10 years down the line via gaping budget deficits.”

Now that’s something to get you screaming at night!


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