This morning, as I look at the US national debt clock, www.US debt clock.org, America is $19,259,400,000,000 in debt ($19.3 trillion). That means that each taxpayer has a debt of $161,000.
There is an insightful article in the Wall Street Journal opinion section “America's coming tax increase” April 23, 2016. Since Pres. Obama has taken office, we have doubled the debt. America’s government for years has been sending more money than it takes in. This is called a deficit. Our economic growth has only been running a 2% during the Obama administration and this slow growth has also added significantly to our debt.
With the new election coming, we have Democrats and Republicans both claiming how they're going to raise taxes or lower taxes, promising everything to everyone. The truth is, with the statistics quoted above, we will have to raise taxes in the future; it doesn’t matter if you're a Democrat or Republican. What we know is our government likes to spend money…PERIOD. Knowing that tax increases are imminent, families need to do more to protect their assets from future taxation risk.
Most families are working very hard to put as much of their savings into their retirement savings plans; 401(k) s, IRA’s, etc. Remember, these retirement savings vehicles postpone the tax. Retirement savings plans do not save taxes, they just postpone taxes. So if we have a crystal ball and know that taxes are going higher, might it make sense to pay the tax today and then repurpose those funds into a vehicle that eliminated future taxation?
These are some of the financial thought processes that I educate my families about. Understanding how money really works, today and in your future, will have a significant impact on wealth. It's time families get very efficient with the money that are saving today so they can keep more of it in your future.
Brace yourselves, higher taxes are coming!