You've successfully subscribed to Mr. Market
Great! Next, complete checkout for full access to Mr. Market
Welcome back! You've successfully signed in.
Success! Your account is fully activated, you now have access to all content.
Success! Your billing info is updated.
Billing info update failed.

Joe Biden's Tax Plan for Investors and Businesses

< 2 min read.

Caleb Dismuke

Whatever your political leanings, we have to operate and invest in reality. Tax policy isn’t something I usually cover, but I think it’s essential to get a sense of what we can expect from a new administration.

What investors can expect:

  • He wants to raise taxes on people earning more than $400,000 a year.
  • He wants to raise the capital gains and dividend tax to 39.6% for people making over $1 million. Currently, the highest tax rate for capital gains is 20%.
  • He wants to cut in half the $23 million cap that a couple could leave tax-free to their heirs. This means gifts and estate taxes, which can be as high as 40%, would kick in at lower dollar levels.

From Axios Markets:

  • "People are making extraordinary gifts before the end of the year, getting those amounts out of their estate," says Joe Maier, an estate and succession planning attorney at the Johnson Financial Group in Racine, Wisconsin.
  • If Biden wins, tax professionals expect an even greater stampede of customers who want to make gifts, set up trusts, and establish philanthropic vehicles called donor-advised funds (DAFs) — all before Dec. 31.
  • Business owners looking to sell their business could see a 40% transaction tax in 2021 vs. 20% currently.

What corporations can expect:

  • He wants to raise the corporate tax to 28% from its current 21%. (It was 35% under President Obama)
  • Like President Trump, he backs tax incentives that encourage domestic manufacturing. This could be a point of compromise with a probable Republican-led Senate. As COVID has shown, we need to make more products within our borders and not rely on other countries to meet our manufacturing needs.

The bottom line

Significant policy changes have to pass through Congress. And if the Republicans control the Senate, much might remain the same. Nevertheless, we’ll cover any policy changes that have a high probability of becoming law.