Bloomberg News: What Financial Advisers Are Telling Rich Clients About Biden’s Tax Hike (April 30, 2021)

Bloomberg News writes about what financial advisers are advising their high net worth clients in light of the Biden tax proposals. The article begins as follows:

President Joe Biden’s proposal to roughly double the capital-gains tax for the rich has put financial advisers in the unusual position of acting as part therapist and part fortune teller. Frantic calls are coming in from clients surprised to see that what they’d dismissed as rhetoric from the 2020 election campaign has come out this week as concrete White House proposals.

Advisers are telling them to keep calm, but they’re also counseling to prepare for action—bringing forward planned asset sales, shedding stock, reallocating investments, and even restructuring income. “Don’t do anything drastic just yet,” Ed Reitmeyer, a partner at accounting company Marcum LLP, is telling his clients. “The world isn’t over because of a higher capital-gains tax rate.”

It may not be over, but it would be changed. For individuals and couples earning more than $1 million, Biden is proposing to increase the tax rate on profits realized when an asset is sold to 39.6%. He also wants to end a tax break that wipes away taxable capital gains at death, allowing families to escape taxes on appreciated assets when they’re inherited.

The current capital-gains tax rate is 20%, one of the lowest levels in the 100-year history of special tax rates for investments. Depending on how the legislationshapes up in the coming months in Congress, the richest Americans can expect larger tax bills in the future. The White House says the new top capital-gains rate—43.4% when including a surtax to help pay for the Affordable Care Act, or Obamacare—applies to 0.3% of taxpayers, or about 500,000 households.

To see the full article (subscription may be required) click Bloomberg News: What Financial Advisers Are Telling Rich Clients About Biden’s Tax Hike (April 30, 2021).

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.

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