Say What? 60% Tax Rate?
Did you know that Biden’s tax plan would put some taxpayers in a combined marginal rate in excess of 60%? Check out the table below. Taxpayers in California, Hawaii, New Jersey and New York City are out of luck!
Table obtained from Taxfoundation.org
Check out Table 2 included in the Tax Foundation article Top Rates in Each State Under Joe Biden’s Tax Plan. You will notice that there isn’t one state where the combined rate is below 52%!
And that’s just personal income tax! If you are an owner of a C corporation, the federal income tax rate would go up to 28% under the proposed tax plan!
It’s true that not all of the taxpayers will be subject to these rates. But will you be part of the “lucky” few? It is also true that Biden’s plan is only likely to advance if Democrats take control of the U.S. Senate after January runoff elections in Georgia.
So how do you deal with this tax uncertainty? – By proactive and strategic tax planning.
During this year’s tax planning sessions we covered current tax laws and proposed changes, ideal legal entity structures, additional deductions and tax credits, potential for more coronavirus legislation among other topics.
In order to protect yourself from an unpleasant surprise in the form of a huge tax bill, you need to stop seeing your accountant once a year at tax season. Proactive tax planning will require more from you and from your accountant because you will need to constantly re-assess changes in tax laws and business environment and modify your business and personal tax strategies to reduce tax liability.
If you want to see how you have been affected by Biden’s tax plan clicking on this link will get you started.
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