According to tax experts Orion Advisor Solutions and Renaissance Macro Research, advisers should take several steps or at least discuss with their clients whether the tax changes proposed by President Joe Biden and the Democratic-led Congress become law.
Because most of the tax changes would affect those who earn more than $ 400,000 a year and own the most assets, high net worth investors in particular are worried about the proposed changes, according to Orion. Many of them are also exposed to many years of deep-seated capital gains.
The potential tax changes also have implications for the M&A climate, as advisers seek business partners, according to Orion.
During the “Let’s Talk Higher Taxes: The Political Debate Heats Up” webinar on Thursday, Steve Pavlick, director of Washington Policy Research for Renaissance, provided some predictions on which tax policies will change and what won’t, and how does it happen. affect the economy, markets and clients’ portfolios.
For example, Democrats likely won’t raise taxes for people earning less than $ 400,000 – which would break a key election promise – and they could raise the threshold at which joint filers see a tax increase, Pavlick said.
Pavlick also said it “would be difficult to remove … completely” the national and local tax deduction cap (SALT) that was included in the 2017 tax overhaul, as it would make it harder for Democrats to find the income they want. need for their proposed programs. . “A more likely scenario” would be to increase the cap from $ 10,000 to $ 15,000, he said.
In the gallery above is what Andy Rosenberger, head of tax management solutions at Orion, called the 10 best achievable steps for a higher tax environment.