(August 2020)
Advisors with high net worth clients—which serve as a large majority—need to be very mindful of numerous Democratic tax proposals. Not only would Biden’s proposed tax plan raise income taxes to over 65% in California, and at least 52% everywhere in the US, but California has just proposed a wealth tax of 0.4% per year on all wealth over $30m per couple. The proposal seems likely to be passed because of Democrats’ super-majority in the state’s legislature. While Biden and the Democrats are still months away from the possibility of entering the White House, they are leading in the polls, which means advisors need to be aware of how these changes could affect advisors.
(New York)
FINSUM + Magnifi: One of the lesser known aspects of Biden’s tax plan is an effective doubling of capital gains taxes on those who earn over $1m. That means utilizing ETFs for tax efficiency is going to be more important than ever. Some sectors do this especially well—think Muni ETFs, dividend ETFs, even super diversified ETFs (since you get broad stock exposure without a lot of taxable events).
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