Displaying items by tag: taxes

Monday, 25 October 2021 19:28

Biden Concedes on Tax Hikes

President Biden told CNN in a town hall this week that he just doesn’t have the votes to hike corporate taxes. Driving the divide is a substantial share of progressives who won’t allow topline taxes and higher spending bills, who are at odds with Democrats in swing states who are lobbying for the opposite. In order to pass the bill, the President would need 60 senate votes so they can bypass filibustering. They need every Democrat on board for that to happen. The White House has made clear that this is only a compromise on corporate taxes, other tax hikes are still in place. Markets are rejoicing because all the stimulus grease may be good for the economy, and now higher taxes will not eat at all the corporate profits.

FINSUM: This might avoid a lot of unneeded volatility, but other income tax and GAAP earnings taxes could be still be enough to disrupt markets.

Published in Wealth Management
Tuesday, 05 October 2021 18:02

Biden Has a New “Marriage Tax”


The House Democrats’ update of the Biden Administration’s tax proposal hit airwaves yesterday, and it is just now starting to sink in. One of the elements that was immediately apparent to one senior tax professional was that the updated capital gains tax proposal is effectively a “marriage tax”, according to Nicole DeRosa, senior tax manager at Wiss. Note that increased rates (5% plus the 3.8% surtax) start at $400,000 of income for individual filers, but $450,000 for joint filers. Many times the joint filing limit would be double the individual limit, but in this case it is barely above. This effectively means married couples are being taxed for their matrimony.

FINSUM: This is illogical and unfair to married couples. Hopefully this does not make it into law in its current form.

Published in Wealth Management
Monday, 04 October 2021 14:55

A Big Change to Biden’s Death Tax Proposals


Biden’s big ‘death tax’ has been spooking advisors and their wealthy clients for months now, and there are very major concerns over if and when it will be implemented. Well we have good news and bad news today. The good news is that both the House Democrats and the Ways and Means commission have put forth proposals with significantly lower tax rates than Biden’s initial budget. The House Democrats, for instance, would keep all-in capital gains taxes at a max of around 28.8% (counting the surtax). The bad news is that a recent adoption by the Ways and Means Commission puts the cutoff date for any company sales that would be affected by Biden’s much bigger capital gains taxes as Sept 13th (for sales with a binding contract prior to that date).

FINSUM: Overall, the direction of the proposals is getting more favorable for the HNW community, but there is still a LONG way to go.

Published in Wealth Management
Tuesday, 28 September 2021 20:43

The Best Model Portfolios Ranked, 6-10

In our continued coverage of Morningstar’s top model portfolios, today we are featuring those ranked 6-10. Morningstar is soon going to double the coverage of the growing model portfolio universe, which is great news for advisors having trouble deciding on which to choose. Without further delay, here are the rankings. Number 10: Vanguard S&P (Silver rating). Number 9: Vanguard Russell (Silver rating). Number 8: Vanguard CRSP (Silver rating). Number 7: American Funds Tax Aware Income (Silver rating). Number 6: American Funds Tax Aware Growth and Income (Silver rating).

FINSUM: Well the list isn’t very diverse in terms of managers, but the Russell model from Vanguard looks like an interesting way to play small caps. Additionally, given Biden’s proposals, tax aware income would be a wise strategy in which to take a holistic approach.

Published in Eq: Total Market


Congressional Democrats are pushing for more ways to increase taxes on wealthy Americans, and their newest mechanism is closing a loophole on Roth IRA contributions. Currently, people making in excess of $400,000 can convert pre-tax retirement saving accounts into a Roth IRA. Technically, individuals can’t contribute to their Roth if their income exceeded $140,000, but the ‘backdoor’ loophole allowed you to convert the pre-tax contributions into a Roth IRA. Additionally, House Democrats are trying to end the ‘mega backdoor’ Roth’s which were saving up to $38,500 for wealthy individuals. The Democratic proposal also is requiring minimum reporting for certain balances and further Roth restrictions. These are significant changes to the potential tax code for the wealthiest, and if implemented these provisions would all come into effect Dec. 31, 2021.

FINSUM: Democrats are also considering automatic enrollment in Roth retirement vehicles in order to boost retirement savings on the lower-income spectrum. These are some of the largest changes to the tax code in recent years, all in an attempt to boost the tax base and pay for a $3.5 spending bill.

Published in Wealth Management
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