Taxes will rise, but by how much?

Taxes are going up after the expiration of the Bush tax cuts in 2010, even if John McCain, R-Ariz., is elected president in November, according to an executive at Stanford Financial Group. “The issue is not whether taxes are going up, it is a matter of when, and by how much,” predicted Gregory Valliere, senior vice president and chief strategist at the Stanford Financial Group in Houston, who was speaking at the Washington-based Investment Management Consultants Association’s 2008 Spring Professional Development Conference in New Orleans. If a Democrat is elected president, the top income tax rate will be increase to at least 39.6% — the rate that was in effect before the Bush tax cuts of 2001 and 2003 that cap income taxes at 35%, he said. Mr. Valliere also predicted that the 15% capital gains tax rate could be increased to 20% by the end of 2010. In addition, the dividend rate could be the taxpayers’ income tax rate, not the 15% level under the Bush tax plan, he said. Congress will not abolish the estate tax but will tax them at 35% or 40%, Mr. Valliere said. Democrats will gain more seats in Congress, and they will become a greater force following the 2008 election, he predicted. “A pending tax increase is a real dark cloud for the stock market for the rest of the year,” Mr. Valliere said, adding that he expects a big tax bill to be passed in 2009. “Taxes are going to be a hot topic for your clients.” The Stanford Financial Group manages $43 billion in assets.