There have been a lot of bail-outs lately. In fact, in just a few months we’ve gone from a hands off policy for business (as respects to the government) to a government that is now invested heavily in insurance, banking, mortgage, and investment capital.
And, the bail outs have just begun. I’ve followed the coming crisis for Social Security for years now. The numbers just don’t work. Baby Boomers are retiring. Until now, we’ve had many people paying into the system to support the few (from the generations before) in their golden years. In fact, you’d think that there was a huge surplus just sitting there waiting for the Boomers when they retire. After all, there have been so many more per capita paying in.
But the money’s not there. In fact, there is a deficit. Now, the Boomers are retiring and it’s up to the younger generations to support them. But there are less in Gen X then Boomers, so the numbers have radically swung the other way. (Luckily Gen Y is coming behind them and there are almost as many Gen Y as there are Gen X. Still, how many of them want to inherit the transgressions of their parents and grandparents?)
Something has to be done and the time is getting critical. President-elect Obama has called for a removal of the cap on Social Security wages. That means that the tax rate will soon be almost 60%. That’s right – we’ve gone from 35% to 60%!
It’s never been more important than now to prepare for what is going to happen. Keep your business structures and your tax strategies flexible. There will likely be changes coming.