Let's be clear: If Barack Obama is elected, everyone who has an investment will face higher taxes because Obama and an overwhelmingly Democratic Congress will raise the rate on capital gains. There is also a "hidden tax" that will come from the depressing effect on stock prices. (And does anyone think higher cap-gains rates are just what the housing market ordered?) But Stanford Group policy analyst Greg Valliere thinks income tax rates could be going up higher than expected and affect more than just the so-called rich (bold is mine):
If Obama wins, he probably will have tax legislation before Congress before the end of next winter. He will surely seek to abolish the Bush tax cuts for "the rich," loosely defined as those who make more than $250,000 per year. But with the budget deficit exploding, the definition of "rich" may be defined down to pay for Obama's spending priorities in areas such as health and the infrastructure. The top individual rate, now 36%, is scheduled to revert back to the old top rate of 39.6% at the end of 2010, but Obama probably would attempt to raise it more quickly. Some Democrats want to add a surcharge of 1 or 2 percentage points on top of 39.6% for individuals making more than $500,000. Taxing "the rich" is easy game for Democrats in this election cycle—since virtually all of these "rich" households are in reliably Democratic "blue" states in the Northeast or California.... Perhaps the biggest tax issue for the financial markets involves the capital gains and dividend rates.... If Obama wins, those rates are likely to wind up in the mid-20s, with an effective date that could come as early as some time next year.... With the Democrats determined to raise taxes (the Social Security payroll tax cap also would rise), there's a bit of good news: there's a strong consensus that the top corporate rate of 35% is too high; it probably will come down to 30 or 31%. And some middle class taxpayers may get relief on the Alternative Minimum Tax.