Well, if the President and Congress do not act before the end of the year, the Bush-era income tax cuts will expire along with the December 2010 transfer tax increases (estate, gift, and generation-skipping transfer taxes) and those tax laws will revert to what they were in 2001. Now, if that situation occurs, then the following would be most potential outcome;

1) The 10% income tax bracket will be eliminated and the rates in the current 25% and higher income tax bracket will all increase.

2) The marginal income tax rate for top earners will increase from 35% to 39.6% plus a Medicare surtax.

3) The long-term capital gains tax rate will increase from 15% to 20%.

4) Dividends will be taxed as ordinary income instead of at 15%. For top earners, this means dividends will be taxed at 39.6% plus a 'Medicare surtax'.

5) Lower income bracket taxpayers, that is those now in the 10% and 15% brackets will no longer be exempt from paying tax on capital gains and dividends.

6) The estate tax exemption will go from $5.12 million to $1 million. Assets over the exempt amount, currently taxed at 35%, will be taxed at graduated rates starting at 35% and going up to 55%. This means more assets will be taxed at higher rates.

7) The generation-skipping transfer tax exemption will go from $5.12 million to $1 million, adjusted for inflation, and the rate will increase from 35% to 55%.

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