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One of the keys to tax planning is to try to anticipate tax law changes and act on them. Of course, this is not always easy to do.


The 2008 election may change the makeup of the U.S. Senate. Republicans have to protect 21 seats while the Democrats only have 12 seats at risk, and experts predict that the Republicans could lose four to seven seats. And if a Democrat wins the White House, there will more than likely be major changes to existing tax laws.


Some of the changes that may affect you include:

  • An increase in the capital gains tax rates, currently at 15 percent for long-term gains. This rate could increase to 20-25 percent.

  • Early repeal of the special 15 percent tax on qualified dividends.

  • A possible 4-6 percent surcharge on "wealthy" taxpayers.

  • Higher self-employment taxes on S firms and partnerships requiring payment of payroll taxes on a taxpayer's share of income.

  • Continued phase-out of itemized deductions and personal exemptions.

  • Potential repeal of the much-dreaded "AMT" (Alternative Minimum Tax)

  • Basis reporting by brokers when securities are sold.

There would also likely be changes in the corporate tax arena as well, including a lowering of corporate rates.

As the time nears, it may be worth looking at tax planning opportunities in 2007 and 2008 to take advantage of the current rates available. Stay tuned as the political elections heat up.


-By Mike Noretto, CPA, CVA (New Philadelphia office)


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We take great care in the preparation of our articles and announcements. We also have a process of reviewing articles when major changes take place. The business, legal and tax climate is constantly changing especially when reviewed on an industry basis.

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