One of the major differences between President Obama and Mitt Romney was their opinions on how to handle taxation of the middle and upper class. Obama favors an increased tax rate for the wealthiest Americans, and not surprisingly, Democrat-dominated California voted to increase the state tax rate on earners in the higher tax brackets. People earning between $250,000 and $300,000 will now pay 10.3 percent in state income tax. Those earning $1 million and more will now pay 13.3 percent, which is a 3 percent increase.
Whether or not a person falls into these tax categories, everybody wants to avoid unnecessary taxation. In California it appears the majority of voters felt like the wealthy should shoulder a larger tax burden than lower-income residents. However, all Californians will be pitching in on this effort as the ballot measure also increases sales tax from 7.25 percent to 7.5 percent. Governor Brown's budget relies heavily on this tax increase, which will also be used to help fund the state's massive public education system.
With taxes going up on a state level, and potentially skyrocketing at a federal level in the near future, the need for sound and responsible estate planning has never been greater. With gridlock in Washington, D.C., people should be aware of the very real need for asset protection as the U.S. teeters on the edge of a fiscal cliff.
Whether it's setting up a trust, making a lifetime gift or preparing a will, individuals should use estate planning to protect their assets. The best way to ensure that money is going where a person intended, and will be free from excessive taxation, is with the help of an experienced estates and trusts attorney. With so much turmoil in the financial and political world, there may not be a moment to lose.
Source: Forbes, "California Voters Sock It To The Rich (And The Fate Of Other State Tax Ballot Measures)," Ashlea Ebeling, Nov, 8, 2012