44 • MARTIN H. RUBY
Since 2012, the federal government has raised taxes on capital gains and dividends, Medicare surtax, payroll taxes and taxes for higher earners. That’s in the last few years alone. Taxes penalize successful people like you. If you work hard and make more money, you pay more taxes. You pay local, state and federal taxes, but by far the biggest chunk of that is federal tax, so that’s what we’ll focus on in this chapter. First, let’s talk about ways your taxes could go up. Then, we’ll talk about how this could hurt your retirement accounts. There are four ways your taxes could go up. No. 1: The government raises tax rates: Here’s the most com- mon way people think taxes rise. Today, a couple making $200,000 pays a 24 percent marginal tax rate on their income. But Congress could change the rules, and in the future that same cou- ple making that same $200,000 could pay a 30 percent tax rate on their income. In fact, we know taxes are going up in the future, because they are artificially low today. In December 2017, Congress passed the most sweeping overhaul of the U.S Tax Code we’ve seen in nearly 30 years. It reduced the marginal tax rate for many savers, and be- cause of it, many of us today are in lower tax brackets than we were a few years ago. But those tax brackets don’t last forever! They are a temporary adjustment. As Congress often does, it included sunset provisions in the bill. That means, in the future, the tax cuts expire and revert back to the old levels. In fact, most household tax provisions in the new law sunset in 2025. So, you can plan on tax rates rising in the near future unless Congress acts again to keep them low.
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