Under current law the $100,000 adjusted gross income ceiling for Roth conversions will be removed in 2010. If the Democrats regain the presidency in 2008 and keep control of Congress, is it likely that they will repeal this provision? I don't want to make a non-deductible IRA contribution and not be able to convert in 2010.
Keep in mind, what would occur in 2010 would be a revenue generator in
2011/12. Note, revenue would decrease at some point in the future, but the conversion is a short term boost to tax income. So wouldn't anyone in office want this? It makes the deficit look better, and the long run is, well, far off.JOE JoeTaxpayer.com
yes, the democrats will do everything they can to screw you. Thanks for all your hard work.
From the charter for this group: "[...] and political opinions should be directed elsewhere".
However, leaving aside partisanship, it is a fact that tax laws are subject to change. A taxing authority, such as the U.S. government, would most likely prefer that ordinary people trust in its stability and absence of abrupt, arbitrary changes.
What you have to fear more than revocation of a 3-to-5 year future commitment, in my opinion, is *lack* of a next-year future commitment (such as the continued extension of sales tax optional deduction, tuition and fees deduction, AMT temporarily higher deduction, and so on).
Of course no one has committed to the future of non-cash charitable contributions, so don't count on that at all! ;-)
-Mark Bole
Given the likely fiscal position of the US government, I would suggest this is a very good analysis. Easier for the Congress to do nothing, and tax revenues to rise, than for it to do *something* which might be seen to be hurting one group of taxpayers or another.
If you look at the history of past 'pulses' in US Federal Spending (LBJ, Nixon, Reagan -- ie both defence and civilian) then they are usually followed by long periods of tax increases/ slower growth in government spending (Ford/Carter, Bush I/ Clinton).
(that's not to say that is what the Presidents in question intended to do, when they came to office. It's just how the nature of domestic and international political challenges played out)
This, I would tender, is true regardless of the partisan stripe in the White House and/ or the Congress. Although history says that when one party controls both houses and the White House, spending accelerates, (FDR, LBJ and Bush II were the only 3 modern presidents where the President's party controlled both Houses, I believe, and I believe they also each orchestrated the largest sustained rise in Federal spending), and it decelerates when control is split.
The implication for personal financial planning is as Mark's excellent analysis suggests: plan on 'stealth' tax raises, eg by non-extension of current reductions.
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