Thank you for asking.  I hope you realize that I can't see the future any better than anyone else, but I'll give you my views below.  Bud


-------------- Original message from Trish Callis <>: --------------

I think many readers would be interested in your take on this, especially since the $100K AGI limit will be lifted in 2010.  For example, I believe taxes are bound to go up in the higher brackets but wonder if there will be much change to the current 15% bracket.


I doubt if there will be much change in the 15% bracket, but you will feel the effects of higher state taxes, and the costs of higher taxes on corporations and high income people will be reflected in higher prices of the products you buy.


Further, what are the chances of a VAT being enacted?  


It's possible, but not probable.  Almost half of all workers will be paying no income tax, so there is a large voting block to increase taxes on higher income people, but 100% of the people would be paying the VAT, so it wouldn't be politically acceptable.


Then Roth IRA distributions would effectively be taxed again as they are spent.


True, but I don't think that will  happen.  It's possible that the Roth income would be considered in the "phase out of deductions and expemptions" but you have to be a high income person to be caught in this entanglement.


My husband and I are each 61, retired, and living off savings.  Roughly half is in IRAs and the other half in ordinary CDs and mutual funds (no capital gains to speak of), so the tax on a ROTH conversion would come from savings.  I'm not concerned about a taxable estate.


If you make the conversion, it only makes sense if (1) you expect future tax rates to be higher, and (2) if you can pay the tax due on conversion from non-qualified accounts.


Thanks for the web site!

Trish Callis (aka Patricia Callis Nicholson)

Columbus, Ohio


See Jim's garden photos @