Last week, President Obama released his first budget proposal for Fiscal Year 2010. Most of the attention has focused on total spending ($3.55 trillion) and the total deficit ($1.75 trillion). However, the budget includes several tax provisions that are worth discussing now, especially for those of you who qualify as “wealthy."

Specifically, Obama proposes to let the Bush tax cuts expire for individuals making over $200,000 and households making over $250,000. This means that "marginal" rates (the rate you pay on your last dollar of income) would climb from their current 35% back up to 39.6%. Tax on long-term capital gains (gains from the sale of property you hold more than 12 months) would climb from their current 15% back up to 20%.

Obama would also cap the value of itemized deductions at 28%, so that even taxpayers in higher brackets save no more than 28 cents tax for each dollar of deduction. Currently, if you're in the 35% bracket, deducting $1,000 saves $350 in taxes. Under the new rule, your savings would be limited to just $280.This proposal is especially controversial, as it would limit the value of deductions for charitable gifts.

According to Bloomberg News, this will raise an extra trillion dollars in tax over the next 10 years.

These proposals won't take effect until 2011, if they take effect at all. But now is the time to start planning for higher taxes, whether you they threaten you directly or not. Do you feel like there's a bulls-eye on your back? Call us so we can begin planning your strategy for protecting yourself!

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