The presidential campaign is heating up and upper-income clients may see an increase in taxes. For families making less than $250,000, Obama’s plan will not raise your taxes but will provide a tax cut. He wants to raise the top ordinary income - tax rate from 35% to 39.6% The Obama Plan also encompasses higher Social Security Taxes on workers making over $250,000. In contrasts Sen. McCain wants to make permanent the current federal income tax rates - he also opposes the Obama plan to lift the earnings cap on the Social Security payroll tax. Obama wants to raise the long-term capital-gains rate for families making $250,000 to around 20% or higher - but not above the 28% level it reached during the Reagan presidency. To be prudent, we recommend that business owners plan on 28% if Obama is elected. While McCain wants to keep the current structure of tax rates on capital gains and dividends - he will almost certainly be forced into compromising with the Democrats as long as they control Congress so don’t expect him to resist the increase from 15% to 20% that is already legislated to happen automatically in 2010. In summary, capital-gains rates are likely to go up more and sooner if Obama wins - even if McCain is not forced by Congress into raising the percentage, the 15% rate is set to rise automatically in 2010. Bob Willens, President of a tax-advisory firm in New York, agrees that the capital-gains rate is going up next year but argues there is no reason to rush to sell your business today since lawmakers aren’t likely to make tax-rate increase retroactive until mid 2009. We disagree because it requires 6 to 12 months to sell most businesses when efforts are made to sell at maximum value. One year from this posting puts us into mid 2009!