It is always a good idea for Californians to be proactive in preparing for potential adjustments to tax law. Political fluctuations likely accompany differences with how taxes are assessed and collected. Particularly, this can impact businesses and those who have significant income and assets. It is not necessary to discuss personal political preferences between one side or the other to understand fundamentals of how the philosophies differ and what it means for a tax bill. As with any other area of taxes, legal advice can be critical.
A new president generally means a new tax code
With a different presidential administration, changes are inevitable, especially considering the polarized political climate. A new president is expected to place the tax onus on wealthier people. Those in the investment industry have used various loopholes to limit their tax exposure. Closing these loopholes is a given. If the House of Representatives and Senate are also in the hands of a single party, there is little to stop major overhauls of the tax code. This will presumably cost those who have substantial assets more.
Based on preliminary proposals, it is safe to assume that for those whose incomes surpass $400,000 annually, taxes are set to rise. The ordinary tax rate will increase by two percentage points to just shy of 40%. Wealth transfer – a major concern for people with vast assets – will be altered. When the current tax laws were passed, it doubled what could be transferred to avoid the estate and gift tax. As of now, is $11.58 million for an individual. If that decreases, it may be important to find other strategies to shield assets.
Political preferences and persuasions should not hinder preparedness
Regardless of where a person sits on the political spectrum, protecting assets and reducing taxes is a concern. There is no viable method to accurately predict what will happen in an election. However, there is nothing wrong with being ready for whatever may arise. The estate and gift tax, federal taxes among other considerations should be analyzed as soon as possible so the pieces can be put in place to avoid hefty expenses. Consulting with a firm experienced in tax law is a wise step.
