Tax Hikes Coming No Matter Who Wins White House

Tax (Photo credit: 401(K) 2012)

Washington, Sept. 25, stock advice .- Regardless of who wins the White House, the new health-care law will raise taxes on high-income Americans next year—and that could have implications for stocks and other assets. Starting Jan. 1, there will be an additional 3.8 percent tax on investment income—including capital gains, dividends and rental income. It will apply to married couples with adjusted gross income of $250,000 or more and for individuals above $200,000.

There will also be a 0.9 percent tax next year on all salaries and wages earned above those same threshold amounts.

The new taxes, part of the 2010 health care law, are expected to help fund Medicare.

The tax hikes mean that the current dividend and capital gains tax rates of 15 percent will rise to at least to 18.8 percent next year for the wealthiest tax payers.

If Democrats win the White House and Senate, they are expected to push for a 20 percent capital gains and dividend tax rate, while Republican presidential hopeful Mitt Romney favors no change.

Should the U.S. hit the “fiscal cliff” and Congress lets the Bush tax cuts expire on Dec. 31, the highest income bracket would revert back to 39.6 percent. So with an additional 3.8 percent investment income tax, dividends could be taxed at 43.4 percent. (Read More: Taxing the Credibility of Politicians)

“I think people understand their dividends are going to be taxed differently, but many of them don’t understand the magnitude of that jump,” said Leo Grohowski, CIO of BNY Mellon Wealth Management. ... Continue to read.

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