Area #1: Taxes

We've told you before, and we'll tell you again: Taxes will go up.  They had to increase no matter which candidate won yesterday. Someone has to pay for all the spending that is already in the pipeline and for the massive amounts of spending that is to come with Democratic control of the Congress.

If you voted for Obama in the belief that you would see your taxes lowered, since you're part of that often mentioned "95% of taxpayers," we're sorry to tell you that you may be disappointed.

This proposal was never achievable and now, while the glow of his victory brightly shines, he could renege on this promise with the least amount of backlash. In fact, we wouldn't be surprised if he doesn't even mention it in his first 100 days.

One promise we do expect to see Obama follow through on is his pledge to raise the rate at which long-term capital gains are taxed. With a Democratic majority in Congress, this too shall pass, putting more downward pressure on stocks as those few fortunate investors who still have some gains cash out before tax rates rise.

Higher tax rates, even if only pushed onto the top 5% of all wage earners, will cause two dire results:

1. People will change the way they earn and invest, creating lower tax revenues for the government, necessitating the need to dip lower into the working class to make up the difference.

2. High tax states such as California and New York will see more businesses and individuals moving to tax-friendlier states, seeking preservation of income.

That migration will lead to HUGE state tax revenue losses that will put high-tax states into even more serious fiscal chaos than they are presently experiencing. These states will start digging for federal bailouts.

In addition, Social Security taxes for the working class will most likely rise…with higher income earners also, likely, experiencing increases. This will create the perception of Social Security as a welfare program rather than an entitlement program.

And, with all these tax increases, the much-needed return of the American consumer to the retail market will be severely hindered, prolonging the economic downturn.

The bottom line is this: Now, more than ever, you need to make % sure that you are taking every possible deduction on your taxes. Start with our 11 Little-Known Tax Deductions that Can Save You a Bundle, and we'll talk about many more tax-saving strategies in the coming weeks and months to help you offset any increases.

Next: A New Stimulus Package?