Tax Hike

According to Magnifi post on April 1, 2021 published by Forbes (Washington);

One of Biden’s most important campaign promises was that he would not raise taxes on the middle
class, or more specifically those earning less than $400,000. However, there is a new Democratic
proposal circulating that would affect a wide range of Americans. The aim of the tax proposal
appears to be funding the new infrastructure bill by targeting “stepped up basis” in inheritance taxes as
a way to raise tax revenue. Right now, when inherited assets get transferred, their basis resets to
whatever the market value is at the time of inheritance. In this way, heirs only pay capital gains on the
increase in value that occurs while they hold the asset. Biden and his administration want to change
the rules in order to keep the basis in place from when the original buyer purchased the asset. This
change would not only affect the wealthy in a big way, but also the middle class, as the basis for many
assets would suddenly be very low, meaning large taxes would be due no matter the size of the estate
being transferred. A good example might be an inherited condo from a parent that was bought 30 years
ago and has appreciated from $100,000 at purchase to $600,000 now. Under the current system, a
middle class earner who inherited and decided to immediately sell the condo would pay almost no
taxes. However, under the new proposal, almost $100,000 in taxes would be due because basis would
be applied to the original purchase price.

(Washington) Forbes

So what does this mean for high income earners? This provides an opportunity for high income earners to implement tax strategies that will give back to charities, save the environment and increase personal and family wealth. Ask us if you qualify. Click link below for a complimentary consultation with one of our tax strategists.