With the election season behind us, some of the uncertainty about personal tax rates has been lifted. Of particular note for California taxpayers are tax increases resulting from the passage of Proposition 30, which are effective through 2018. The tax increases included in Proposition 30 are as follows:
* Excludes 1% mental health tax on taxable income in excess of $1 million. While California’s personal income tax rates are now known, many issues remain unresolved related to the “Fiscal Cliff” facing the U.S. government. Fiscal Cliff is a term used to describe the expected adverse effects on the U.S. economy of various laws that, if left unchanged, are expected to result in tax increases and government spending cuts beginning in 2013. Several key issues are being discussed by policymakers related to the Fiscal Cliff, including the following:
We are continuing to monitor the political, economic, and financial market effects of the U.S. government’s activities related to the Fiscal Cliff, as well as economic conditions and geopolitical events around the world. While we are cautiously optimistic that policymakers will come together to address the Fiscal Cliff issues, the timing and manner in which these issues will be addressed are uncertain. Accordingly, the financial markets may be subject to increased volatility over the next several weeks and months as events unfold. As we emphasized in our July newsletter in the context of the European fiscal crisis and a century of uncertainty, we continue to maintain a long-term view of the financial markets focused on appropriate asset allocation, tax efficiency, disciplined rebalancing, and managing costs for our clients. Please do not hesitate to contact one of our professional advisers if you have questions about this information or would like to discuss other matters related to your financial situation.