What to Expect when the Bush Tax Cuts Expire

Well it is not just the Euro or China that faces headwinds from political uncertainty but also the US.

Should the “Bush Tax cuts” be allowed to expire, then this means generally higher taxes for Americans.

From Yahoo, (bold and italics original)

The so-called Bush tax cuts are scheduled to expire at the end of this year. While you may already know that, you may not fully understand what's in store for you and your family. Here's what to expect.

Higher Tax Rates for All

You may think only individuals in the top two brackets will face higher federal income taxes if the Bush cuts go bye-bye as scheduled on Jan. 1, 2013. Not true. Unless Congress takes action and the president goes along (whoever that is), rates will go up for everyone -- not just "the rich." Specifically, the existing 10% bracket will go away, and the lowest "new" bracket will be 15%. The existing 25% bracket will be replaced by the "new" 28% bracket; the existing 28% bracket will be replaced by the new 31% bracket; the existing 33% bracket will be replaced by the 36% bracket; and the existing 35% bracket will be replaced by the 39.6% bracket.

Bottom line: We'll all see higher taxes.

In addition to the above, there would be broader implications.

As the same yahoo article explains, we should expect higher capital gains and dividends taxes for everyone, harsher marriage penalty, return of the phase-out rule for itemized deductions, return of phase-out rule for personal exemptions and with only some of the “Bush Tax Cuts” that may likely be retained

Higher taxes means private sector funds will be shifted from productive to consumption use. This means slower real economic growth amidst a fragile economic environment.

And this also means taxpayers will be laboring on to pay for all the wasteful projects and activities of politicians and their cronies (Wall Street, green energy, labor unions etc..)