Tax Debate: Read My Lip Service

If Kerry prevails in the election, investors should consider taking some capital gains this year, rather than postponing them until 2005, advised Carol Ferguson, a manager with the CPA institute.

Estate Taxes

Under the 2001 act, the estate tax is gradually being phased out until it disappears for one year in 2010, then returns in 2011 on estates of $1 million or more. In this year and next, the tax applies to estates larger than $1.5 million.

Bush would like to eliminate the estate tax altogether. Kerry favors taxes on the largest estates.

Alternative Minimum Tax

The AMT, was intended to ensure that the wealthiest taxpayers paid income tax even if they took numerous tax breaks. But in recent years the AMT -- which is not adjusted for inflation -- has swept up many middle-class families and is accounting for an increasingly larger share of tax revenues.

Both Bush and Kerry have said they would consider a bipartisan approach to reforming the AMT.

If the newly elected president is compelled to raise taxes, taxpayers should have some warning, said Ferguson. Tax hikes usually take effect on the date of enactment or the date of introduction to Congress, she said, while tax decreases can be retroactive: "It's very easy for them to send you more money in the mail."

Directly and indirectly, the contrasting tax policies of the two candidates are of great import to taxpayers and investors. But in the end, reality, not rhetoric, may turn the tide in setting the agenda of the next four years.