WHEELING - Higher capital gains taxes, higher estate taxes and higher health care costs will result from President Obama's re-election, according to a panel of accountants and business professionals.
While they foresee gloomy days ahead because of Obamacare and other tax increases next year, the financial advisers said Thursday they also believe the growing oil and gas industry gives the Upper Ohio Valley a bright future.
"Yes - we are dealing with obstacles right now," said Ralph Minto Jr., an accountant and tax attorney practicing in Pennsylvania and Florida, speaking during the West Liberty University program titled "The Upcoming Tax Bomb" at the Capitol Theatre ballroom.
Photo by Casey Junkins
Ralph Minto Jr., an accountant and tax attorney practicing in Pennsylvania and Florida, speaks during the Thursday West Liberty University program titled “The Upcoming Tax Bomb” at the Capitol Theatre ballroom.
"But we need to have the foresight. You could be a very, very wealthy individual," he told the crowd regarding the burgeoning Marcellus and Utica shale business in the Wheeling area.
Craig Seachrist, president of the accounting firm of Seachrist, Kennon & Marling is also optimistic about how the oil and gas industry provides eastern Ohio and northern West Virginia a chance to succeed in the face of national deficits and tax increases.
"This is still in the very early stages," he said of the gas drilling, fracking, transporting, processing and cracking. "If you look 10 or 12 years down the road, this is going to be a boom for this region."
Despite the optimism from the natural gas industry, Minto and Seachrist - along with Samuel J. Lapp, president of JHL Tax Service - warned those in attendance that they need to prepare for higher taxes next year, especially if Republicans and Democrats in Congress cannot reach some sort of compromise.
"Unfortunately, Obamacare will not be repealed," Seachrist said of the president's health care plan. "There is no escaping this now. It is going to affect all of your pocketbooks."
Seachrist said some estimates show that Obamacare - via the combination of tax increases and reductions of funding for other programs - will cost about $1.2 trillion over 10 years.
Minto said he is advising his clients to be "very, very proactive in monitoring employee health care costs" to make sure they can handle the increased burden.
In an effort to avoid the high costs associated with Obamacare taxes, Seachrist said many employers are looking for ways to cut full-time workers back to part-time. He also said a business with fewer than 50 employees will have the right to simply drop health insurance, forcing workers to obtain coverage through some other means.
Lapp also noted that capital gains tax rates - those investors pay for income on the sale of stocks - are set to increase from 15 percent to 20 percent. He also said the estate tax may go from 35 percent to 55 percent, with a $1 million exemption.
"If anybody has an estate in excess of $1 million, you are really going to have to seek some advice for your estates," Lapp said.
Lapp also noted U.S. Federal Reserve's regular efforts to pump money into the nation's financial system is also creating a potential for inflation - and very low interest rates.
"I worry about hyperinflation. They are just printing money right now," he said.
To combat this potential problem, Lapp said those looking to protect their wealth may want to look into more traditional investments.
"Buy gold," he said.
Despite the pending tax increases and fiscal problems, Minto said he does not believe America's best days are behind it. He acknowledged that the Republican-controlled U.S. House of Representatives does not want to increase taxes, while the Democrat-controlled U.S. Senate does not want to cut entitlement programs. However, Minto believes Obama and Congress will find some sort of a compromise between now and Jan. 1 to avoid even more problems.
"I believe we will work through this, just like America always does," he said. "We will probably be in the same fiscal shape we are now."