The Outlook For Taxes This Year
As we celebrate leaving 2009 behind, we necessarily turn towards 2010 and start considering what the future holds. For example, what does the year hang on the tax front?
2009 was an original year when it came to personal finance because of the unheard of tax relief given to taxpayers. There have been obvious government efforts such as the cash for clunkers program to rejuvenate the auto industry and the first-time homebuyer's tax credit to complete the same for housing. Then there have been smaller things such as the IRS allowing businesses to retroactively apply losses for five past years to gain big refunds. The goal of all these programs was to stabilize the economy and help us all survive a brutal period of time.
Whilst the 2009 tax breaks were great, everything come to end in finance. 2010 is the year we will see this happen. Most programs are going to come to an end in the first quarter or half of the season and there will be no further extensions. Why? There simply cannot be. The government has tried to spend its way out of the economic mess, but all indications are we are nearing the point where borrowing is beginning to become difficult. Many Americans are worried about our soaring national debt and devalued dollar and it now appears investors may be as well. This will necessarily lead to the government pulling back on tax incentives.
The other big tax event that seems primed to be implemented this season is the internet sales tax. If the us government has debt problems, not quite a third of all states are in massive trouble with California and Arizona leading the way. These states are receiving pummeled as property tax revenue dries up with the housing debacle and so are looking for new revenue sources. Most web businesses usually do not pay sales tax on the sales, which provides them a plus over local brick and mortar shops.
Some states have already started trying to go after on line sales tax. New York famously passed a law permitting the recovery of it so long as the online business had a single affiliate sale in the state. Instead of garnering a tax windfall for the state, large entities like Amazon and Overstock simply terminated all their affiliates in the state! Still, this is a battle that will eventually lead to a universal online sales tax being implemented. Given the big shortfalls faced by many states, 2010 seems to be the year it comes to a head.
Vice taxes are also possibilities this season. Online poker seems peaked for a reunite with Barney Frank pushing it as a swap for a tax benefit. Other states are seriously considering expanded gambling options and even that funny grass smoked by hippies is on the ballot in some progressive states like California, Oregon and what perhaps you have. Will they pass? My crystal ball is a bit fuzzy, but it appears to be that some will.
2010 is shaping up to be the year the bill comes due for all the efforts made by state and authorities to deal with the economic collapse. Practically speaking, that means fewer tax breaks and more incremental taxes wherever you look.
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