In the wake of the November 6 elections, voters have approved a number of contentious state initiatives, including a $6-billion-a-year bundle of tax increases sponsored by California Governor Jerry Brown. Proposition 30, a focal point of Brown’s administration, would increase the sales tax by 0.25 cent for the next four years, while raising income taxes on those earning more than $250,000 for the next seven years.
Small business owners, some of whom have spent their lifetimes building their businesses, are unloading them before the end of the year in order to save taxes.
The current capital gains tax rate is 15 percent, but in January it is scheduled to increase to 20 percent, plus the ObamaCare tax of 3.8 percent added on top brings it to 23.8 percent, a jump of 58 percent. Even if a lame-duck Congress extends the present rate of 15 percent, there is no conversation in Washington about repealing the ObamaCare tax, so at best capital gains taxes will increase by 25 percent after the first of the year.
On January 1, 2013, many new taxes are set to begin. Unless Congress and the White House can agree by year's end on an extension of tax cuts that have been in place for most of the past decade, workers will see an increase in the taxes taken out of their paychecks next year and a loss in the amount they claim for deductions when it comes time to pay their 2013 taxes.
Friday’s jobs report from the Bureau of Labor Statistics (BLS) stated that “total non-farm payroll employment increased by 171,000 in October, and the unemployment rate was essentially unchanged [from September] at 7.9 percent.”
Federal Reserve Bank of Boston President and CEO Eric S. Rosengren told a Babson College audience November 1 he favored the Federal Reserve continuing QE3 policies at least until unemployment falls below the 7.25 percent marker, even if the policies fail to stop another recessionary spike in unemployment.