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According to the CNBC Millionaire Survey, US millionaires are bracing for a tax hike next year, despite predictions about the Washington stalemate and a Republican-led senate.
Nearly two-thirds of millionaires say taxes will increase under a Biden administration, according to the survey, which polled 750 people with investment assets of more than $ 1 million. And 43% say they already pay too much in taxes, according to the survey.
“I think the wealthy are looking at stimulus spending and the effects of the virus and they recognize that some form of their taxes will rise over many years,” said George Walper, Spectrem Group CEO, who co-authored the study. with CNBC. “They are realistic.”
President-elect Joe Biden campaigned with a promise to levy taxes on those who earn more than $ 400,000 a year. But with the Senate likely to be split or remain under Republican control, it seems less likely that a major tax reform will be enacted.
Still, as deficits and expenditures soar, many expect some form of tax hikes to offset the costs. Walper said that even if federal income taxes don’t rise, states and local governments may need to raise taxes to make up for the lack of new federal support.
“If you look at real estate taxes, they can go up,” Walper said.
When it comes to tax justice, American millionaires feel they are paying enough already. While 50% say they think the amount they pay is reasonable, 43% say they pay too much, while 8% say they pay too little.
At the same time, they believe Biden’s $ 400,000 income threshold for tax increases is the right level. More than half said the $ 400,000 cutoff was “about right,” while roughly equal numbers (22% and 26%) say it is too high or too low. However, the reactions differed per political party. Only 11% of Democrats said the $ 400,000 threshold was too low, compared to 38% of Republicans.
Despite predictions that the wealthy would sell stocks or make major changes to their estates as a result of Biden’s tax plan, millionaires plan few changes in their investments or financial planning as a result of possible tax increases. Only 17% planned to sell shares in 2021 due to potential tax changes. With Biden calling for increased estate taxes, 16% plan to make changes to their gift or estate plans.