Preparing for Mid-Terms

by Chris | October 11th, 2010

Traditionally, mid-term elections tend to attract fewer voters than presidential elections. It’s not clear whether 2010 will be different, but if voter enthusiasm is any guide, this year’s mid-terms could break with the past. A Gallup poll found that a majority of voters in every age group expressed at least some enthusiasm about voting in November (see chart).1

One reason for the enthusiasm could be because there are several key financial issues at stake this year. In some cases, your personal finances could be affected by the election outcome.

Tax Policy

A number of tax laws are set to expire after December 31. As a result, many tax rates are slated to revert to higher levels, especially for investors and high-income earners.

Although Congress could decide to extend the lower rates for some or all taxpayers, the federal government is facing trillions of dollars in mandated spending and a national debt that is growing at an unprecedented rate. Many experts believe the only way Congress will be able to meet these obligations is by raising taxes. Although the election outcome will almost certainly have an effect on near-term tax policy, it’s probably a good idea to expect tax rates to be higher in the future and to look for legal ways to help reduce your tax burden.

Stimulus Spending

Although the $787 billion Recovery Act continues to pump money into the economy, there is little agreement over the effect it has had on economic activity and the high unemployment rate. The White House maintains that the stimulus package is on track to save or create 3.5 million jobs by the end of 2010, but 62% of Americans and 73% of private-sector economists believe the spending has not helped create jobs.2–3 Some officials have warned that when the stimulus spending ends in 2011, there could be layoffs of state and local government workers because some of the money was used to avoid layoffs in 2009 and 2010.4 The debate over the effectiveness of using borrowed money to stimulate the economy could play a pivotal role in the election.

Health-Care Reform

The sweeping changes called for by the health-care legislation passed in March 2010 aren’t set to be fully implemented until 2014. Between now and then, look for health-care reform and its effects on the economy to be an ongoing political issue.

Regardless of your enthusiasm for participating in the upcoming elections, it’s important to consider how the 2010 mid-terms could affect your finances.

1) Gallup, 2010
2) Pew Research Center, April 28, 2010
3) CNNMoney, April 26, 2010
4) The Wall Street Journal, February 17, 2010

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald.

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Securities offered through HBW Securities LLC, Member FINRA/SIPC. 3355 Cochran St., Suite 100, Simi Valley, CA 93063, (800) 473-3856. HBW Insurance & Financial Services, Inc. is a separate entity from HBW Securities LLC. HBW Securities LLC does not give tax or legal advice. Chris Lim is a registered representative. Chris Lim is registered to sell securities in the following states (CA License #0G69788).

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