RICH GETTING WORRIED ABOUT TAXES
July 10, 2021 - Douglas Myser
Rich getting worried about taxes. On the campaign trail, President elect Biden stated he would raise taxes on the rich. Now that he is President that may be coming to fruition. Technical provisions in a 114 page document released by the U.S. Treasury could disrupt or dismantle some of the most popular ways the super wealthy have legally avoided taxes for years. One target is dynasty trusts, vehicles that wealthy families use to avoid paying taxes over generations. Another is an even more common tool among the top 1% -- trusts that can move millions, and sometimes billions of dollars to heirs tax free. Rich getting worried about taxes.
Biden's so called "green book" the Treasury Department book that lays out the details of going after dynasty trusts---vehicles that are able to exist for generations without incurring gift, estate, or generation-skipping transfer taxes. The proposal would force trusts to pay capital gains taxes on appreciated assets every 80 years, but it's drafted in a way that would impost taxes as early as Dec. 31, 2030. The change would cause planners to think twice about the strategy. Biden's plan to make heirs pay more, equalize rates between investors and workers and boost taxes on corporations and the wealthy by raising rates are part of a global revival of initiatives to target the rich--a movement that has gained momemtum since the Covid pandemic.
The health crisis blew a massive hole into the budgets of governments around the world, and authorities have proposed or implemented new taxes on capital gains, inheritances, and wealth to raise money for social services and infrastructure spending. The measures are designed to plug potential loopholes in Biden's plans to boost capital gains taxes on the wealthy to ordinary income tax rates, and to tax gifts and large unrealized gains at death. The president has also proposed raising taxes on corporations and increasing the enforcement budget of the IRS. Once that happens the IRS will go after more taxpayers, who will in turn need IRS Tax Resolution.