As our ecomomy continues to struggle, the federal government may be forced to raise taxes. The deficit spending and printing of money by the Fed has not produced the economic spurt they had hoped for. As the Federal and state governments struggle with tax receipts due to the economic slowdown, they may be forced to raise taxes.
The prospect of raising taxes during a recession seems rather foolish, but there is something important to keep in mind: the 2001 & 2003 tax laws are set to expire in 2010. Remember, these laws had a sunset provision which means that if nothing is done to make the law permanent or extended, they would expire. We would then revert back to the what the law was pre-2001. Given the insatiable appetite for revenue in Washington DC, it is highly likely the law will terminate. Plus, with 2010 being an election year, the expiration of the law will occur after the voters have casted their votes. This means there would be no political fall out during a campaign and the voters would have to wait another 2 years before they can 'throw the bums out' for those who allowed the law to expire.
Click here for a Wall Street Journal Article on state income tax increases which is also very likely in the current economic climate due to revenue shortfalls the states are experiencing.
