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MORE INFO ON TAX REFORM

Debates over tax reform are going to intensify this year, especially since the head of the Senate Finance Committee, Max Baucus (a democrat out of MT), announced he is going to leave the Senate after next year. He will push to change the tax code before he is gone.

Most experts believe the special break for capital gains tax is going to end after 2015. In fact, most think that capital gains and dividends will be taxed as ordinary income as a part of the overall tax reforms. Keep in mind that the tax writers are trying to reduce tax rates to keep the money flowing in at the same rate. In order to do that, they have to cut the big tax breaks, and two of the biggest are capital gains and dividends. Most folks say you should expect the tax changes to take effect in 2014.

So how does this affect you? You may want to consider taking your gains before 2015 in order to get the lower tax rate in existence now. Of course, this is complicated because, remember, tax savings is not the only factor to consider when looking at your investments.