Election 2020: The U. S. Elections are over. Now what?
Currently, in Our Undulating World of Taxation, Now is the Time to Focus on the Ball and Be Nimble.
Hopefully, you’ve exercised your choice to vote by now and now we have some things to consider about our Taxes moving forward… depending on who is our next U.S. President. Our two candidates are so divergent on their Tax Policies that many of our Customers are reaching out to us asking about what to do. 1
On the premise of these candidates’ divergent U.S. Tax perspectives, “Accounting Today” published an article that provides an insight into what other customers are asking of their Financial and Accounting Firms where I was quoted.
“Taxes represent the largest expenditure for most families, surpassing mortgages. Taxes matter. Taxes matter today. Taxes matter yesterday. Taxes matter tomorrow. People are asking, and those in the upper quartile and above are asking with more energy, ‘Should they sell? Should they move?”
What we know
EisnerAmper an accounting tax firm compiled a commentary and comparison and other information, that outlines the proposals of the two 2020 U.S. Presidential Candidates
1. Trump: The president has already signed an executive order deferring the collection of Social Security payroll taxes that are taken out of each worker’s paycheck; if re-elected, he has indicated a desire for the deferred taxes to be completely forgiven, and may also try to implement additional payroll tax cuts. Potentially to be proposed is a plan for the expiring provisions under the Tax Cuts and Jobs Act, and he has cited the idea of reducing the capital gains tax rate as well as indexing capital gains to inflation. Has called for “middle-class tax cuts” in the form of rate reductions. Proposes to expand Opportunity Zones and has outlined two policy proposals for companies that bring back jobs from China.
2. Biden: Proposes increasing the top individual tax rate for taxpayers with income exceeding over $400,000 and phasing out the 199A pass-through business deduction at incomes exceeding the same amount, capping tax benefits of itemized deductions, phasing out itemized deductions, and taxing capital gains and qualified dividends for individuals with more than $1 million in income at ordinary income rates. For businesses, proposes increasing corporate tax rates, creating a new corporate minimum tax on global book income of $100 million or more, expanding credits and incentives for growth in American manufacturing, increase the GILTI, and ending TCJA incentives that allow multinationals to lower taxes on income earned overseas. 2
The key here is taxes will change and life will change. Our joint roles with our customers are to create and navigate a path toward optimized after-tax cash flows, increased wealth preservation, and compliance with rules and regulations.
While most clients anticipate a Biden victory to lead to increased tax burdens, limitations on current credits and closure of various programs [such as] Opportunity Zones, under a second Trump term, most clients anticipate a stay-the-course, if not overall tax rate reduction — though, after the spending frenzy of the COVID-19 era, this may be difficult to achieve.
The predictions are that if Biden is elected there might be expectations that tax rates will be increased. If Trump is re-elected, many predict that the tax-course will remain the same.
We Can Do More Than “Wait and See” for You
This is where we can help you see through the fog of the yet to be determined results of the election that promises to be different from what we’ve come to expect in helping you preserve your accumulated wealth.
As we all look toward the future and start assessing how we will move forward, it is important that you consider your long-term goals regarding your wealth and wealth preservation and that you act now. In consideration of your long-term planning analysis, this year’s November election should be kept top of mind, given its possible effects on our future tax laws.
With declining asset values and increased uncertainty making it difficult to part with assets, both economically and psychologically, if your estate is greater than $3.5 million (or $7M combined for spouses), you should be seriously considering your tax planning right now!
Some properly implemented strategies may minimize or potentially even eliminate the 40% tax bite that would otherwise apply had no planning been implemented. Some strategies may allow you to retain access to an income stream that may be estimated or determined before implementing the strategy (minimizing the concern that you may in the future need the assets you parted with today). Some careful planning today could pay hefty dividends tomorrow.
Now is the time to consider your current situation – it may very well be the most profitable conversation you ever have. Failure to plan today may result in a complete loss of these unique opportunities as early as January 2021.
We are here to help. Please contact us at Morris + D’Angelo to discuss how to maximize your unique circumstances.
Daniel frequently provides Media Content via Workshops, Podcasts, and Printed Articles on topics like Bitcoin and Cryptocurrency, Wealth Preservation and Planning, Global Banking, and many other high-level financial topics that serve and demonstrate the Value of our Global Network that should be of interest to those who need Private High-Wealth Services.
If you would like Daniel to speak to you or your Professional Group and bring clarity about the new frontier of the new business tax law changes. Please contact us.
Morris+D’Angelo is the industry leader for many High-Wealth Customers and Organizations.
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