I should mention another potential tax increase that will strongly hit the middle class that has been proposed by Democrats in Congress, but has not been mentioned by the Obama campaign.
Congressional Democrats want to change how 401K retirement contributions work. Instead of allowing people to put money in the investments of their choice, the Congressional Democrats want all 401K money to be invested in US government bonds. Since Ted Kennedy is likely not going to last in the Senate for much longer, Congressional Democrats are proposing this in his name.
The net effect of the bill, first, is to take away choice from anyone who wants to create a retirement fund and makes all retirements dependent on government.
Second, Congress would take away the deductibility of 401K's. Today, all contributions up to 15% of gross income is done with pre-tax money with all taxes deferred until distribution. The new proposal would take away that tax deductibility, making the contributions after-tax money.
So for those who contribute money to a 401K, they would now be taxed on that money immediately.
Congress does not have the votes now to pass such a travesty, but they likely will if they get 60 votes in the Senate. That makes it vitally important to keep the Senate more balanced. Undoubtedly, Obama would sign this legislation as it vastly increases the power of government, so a filibuster would be the only way to stop it.
