As President Biden continues his overhaul of government policies, some are concerned that his administration isn’t sharing enough information to help tax planners help their clients adequately plan for the future.
While Biden and his team have made it clear that high-income earners should expect a “seismic shift” in their tax responsibilities, with the number of proposals under review by Congress and the White House, it’s unclear what that shift will entail.
What’s the overview?
Financial Advisor magazine notes that some of the proposals under consideration include:
- Modifying the upper marginal tax rate from 37% to 39.6%.
- Taxing appreciation in assets transferred by gift or upon death with an exclusion of $1 million per person.
- Removing “like-kind” exchanges for gains exceeding $500,000.
- Removing “carried interest” by taxing it as ordinary income.
But what the Legislative and Executive branches of government will eventually agree on is still very much up in the air.
It is difficult to give real advice when you don’t know what the rules areThomas P. Terry, a CPA and partner at Friedman LLP in Riverhead, N.Y.
A quick push for change: The urgency for change combined with the uncertainty of what that change will be leaves tax planners , whose job is to help clients steward the most responsible choices for the future, literally without much to work with.
And given the current client in Washington, it’s doubtful Biden will be able to resolve this issue with Congress before the absolute last minute, keeping high-income earners and their CPA on their toes anxiously waiting for the information they require to tailor intelligent tax tactics.