All of us know that the United States is in a massive federal deficit. Most pundits on television are letting us know that taxes in some way, shape, or form will have to up. That seems reasonable. Any business that is losing money will eventually have to cut expenses, and figure out how to generate more revenue. We couldn’t cut expenses near enough to solve our problem, so the certainty of some form of increased taxation is an inevitability we will face in the future in my opinion.

The one thing that I don’t hear much talk about is that increasing taxes isn’t the only way to generate additional revenue, but you could certainly choose to reduce overall tax deductions that we take today as another source for increasing additional revenue.

According to a recent study done by the Joint Committee On Taxation (source: Fiscal Year 2010 Budget: Analytical Perspectives. OMB./Table 19-3), here are the top 5 potential sources of tax revenue:

• Employer Provided Healthcare $924 Billion
• Mortgage Interest Deduction $646 Billion
• 401(k) Plans $343 Billion
• Charitable Contributions $273 Billion
• State & Local Taxes $268 Billion

If you think about the deficit we are in as a country, the revenue must ultimately come from somewhere to pay the bills. If you think this may be far fetched for any of these to be reduced or eliminated, remember that history has a way of repeating itself. This is why it is more important than ever to really do some financial planning, and build out a truly comprehensive tax management strategy.

We can never be sure what direction fiscal policy will ultimately go in the near future. We do know as a general rule of thumb that borrowing too much money when you don’t have it can be a catastrophic financial decision. Just look at the recent real estate problems, and ask yourself what might be coming next?

Looking for other articles? 2010 Mileage Rates! , The Top 10 Most Overlooked Tax Deductions , Tax Changes For 2010 , Do You Pay Your Taxes By Credit Card?

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