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October 19, 2010

Seniors Hit Hard if Bush-era Tax Cuts Expire
NEWS FOR SENIORS

FoxNews.com recently published an article detailing changes that will occur if President Obama allows the Bush-era tax cuts to expire. The American Seniors Association wants to keep you informed on important news, but also needs feedback from you. Don't forget to take the follow-up survey at the bottom of this article.

Many seniors rely on their investments to supplement their Social Security, or vice versa. If President Obama allows the Bush-era tax cuts to expire, come January 1, 2011, many seniors will be tightening their purse strings. If nothing is done to prevent these cuts from expiring, many Americans will see higher rates in their 401(k), savings, dividends, and capital gains. A study by The Tax Foundation found that seniors over the age of 65 earn the most (when compared to other age groups) from dividends and capital gains. These earnings were around $77 billion in dividends and more than $150 billion in capital gains. This expiration of tax cuts could mean thousands of dollars less each year for those seniors who use investments as additional income.

If President Obama allows the Bush-era tax cuts to expire, here is what to expect:
  • Capital gains will take a modest hit.
    • Current Rates
      • Lowest Rate: 0%
      • Highest Rate: 15%
    • After Expiration Rates
      • Lowest Rate: 10%
      • Highest Rate: 20%
  • Dividends will take a drastic hit.
    • *Note: dividends used to be taxed as ordinary income*
    • Current rates
      • Lowest Rate: 0%
      • Highest Rate: 15%
    • After Expiration Rates
      • Lowest Rate: 15%
      • Highest Rate: 39.5%
Other notes about the tax cut expiration:
  • The middle class can expect the dividends rates to jump near 30%.
  • Seniors in the upper class bracket have the most to worry about.
  • Those with $25,000 in income from interest and dividends would see taxes go up by $2,000 or more.
  • Not only will individuals feel the pinch of the tax hike, state and local economies will suffer as well. Those economies with a high senior population will feel a significant effect.
  • In state and local economies, the restaurant and entertainment industries will take the biggest hit.
Be sure to use the Tax Hike Calculator at the top of the Fox News article to see how much you can expect your taxes to increase.

To read the article in more detail, please click here.

Don't forget to take our survey on the Bush-era Tax Cuts! We want YOUR opinion!

FoxNews.com. (2010). Not So Golden Years: Rise in Capital Gains and Dividends Tax Would Hit Seniors Hard. Retrieved on October 15, 2010 from www.foxnews.com/politics/2010/10/14/golden-years-golden-rise-capita...
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American Seniors Association | 3700 Mansell Road Suite 220 | Alpharetta | GA | 30022

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