Episode 62: Are Taxes Going Up?
Have your question answered on the Money Wisdom Question Series!
The question we’re answering today is, “Are Taxes Going Up?”
Taxes & The Government
I will say, if I was a betting man, yes, taxes are absolutely going up. In fact, personally, Wendy and I in our household made some changes in 2021 because we anticipate that our tax rate, the taxes that we pay as a couple, will be higher in the future than they are today. Now, there’s a couple of ways to approach this. One is, are our taxes overall going up? Absolutely. The government has borrowed a ton of money this year and to pay for it, taxes have to go up.
Tax Rates
It also seems to be in fashion now to bash people that make a higher income. There’s a perception that they’re not paying their fair share. Unfortunately, people that make a higher income are often those that employ people, whether it’s the way they spend money or whether they own companies. Quite frankly, some people that make a higher income are paying 60% of their income to taxes. Can you imagine that? 60% of what you make to taxes. I don’t care how much money you make, there’s a question whether that’s even moral or not for a government to tax that high.
Takeaways
Regardless, taxes are probably going up because again, the government has borrowed a ton of money to stimulate the economy due to Covid, and someday they’re going to have to pay that money back. You need to make some plans now, and maybe you should pay some taxes now, like Wendy and I have decided to do, so that you don’t have to pay higher taxes in the future.
For example, if my tax rate today is at 40% and in the future, I’m worried it’s going to be 55%, I can pay taxes today at a 40% rate instead of waiting until later to pay taxes at a 55% rate. That might not be your situation, you may be in a lower tax bracket in the future. Therefore, a good financial plan needs to be made so that you can decide, hopefully with a good financial advisor or tax professional, whether it makes more sense to pay taxes at today’s rate or wait until later. And the big key there, the big variable is what is your tax rate going to be? But ultimately, higher taxes, I think, are here to stay.
Thanks for joining me and I hope you found this information helpful!
P.S. If you enjoyed this topic and want to learn more, download your copy of our guide, “Tax Strategies: Buckets Create Tax Choices”.
P.P.S. Feel free to submit questions here for a chance to have them answered!
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
Staying Ahead of the Tax Curve
Retirement doesn’t mean you stop paying taxes – but there are ways to minimize the bite in the long run. With thoughtful, proactive tax planning, you can stay ahead of the curve and keep more of w… -
What’s the Best Age to Start Taking RMDs?
Is it better to take your required minimum distribution (RMD) sooner rather than later? While the IRS determines when you must begin taking RMDs, you may benefit from taking them earlier. An RM… -
Should I Downsize My Home for Retirement?
Equity is on the minds of many pre-retirees and retirees today, more specifically: Should I downsize my home in retirement? And if so, when is the right time to do it? In this week’s Money Wisd… -
How Can You Protect Your Retirement Assets for Your Family?
When you’re focused on planning for retirement, it’s easy to overlook how you can protect your assets for both yourself and your family. While there’s no one-size-fits-all approach, your first ste… -
What Level of Risk Is Right for Your Retirement Plan?
In this week’s Money Wisdom Question Series, Ian Fergusson, RICP® addresses a fundamental concern for anyone approaching or in retirement: What level of risk is appropriate for my retirement plan?… -
What Estate Planning Steps Should I Take?
With retirement on the horizon, you may be wondering what steps you should be taking from an estate planning standpoint. At its core, there are three key estate planning considerations to keep in … -
Podcast 407: Is My Social Security Income Taxable?
Prefer to watch? Click here to watch and listen on YouTube. A common misconception about Social Security is that whether your benefits are taxed depends on the state you live in. While state ta… -
How Can I Protect My Retirement Savings from Market Volatility?
We’ve been receiving a lot of questions lately about how to best protect your retirement savings against stock market volatility. It’s easy to let recent fluctuations in the market shake your conf… -
Avoiding the Retirement Tax Trap
Once you retire, understanding your tax implications becomes even more crucial. After all, taxes don’t disappear in retirement. In fact, as you begin withdrawing from your retirement savings, you … -
Podcast Episode 405: The Retirement Tax Trap
Prefer to watch? Click here to watch and listen on YouTube. The term “tax trap” comes from the misconception that you’ll need less income in retirement, so you’ll pay lower taxes. This leads ma…