COVID-19′s blow to the economy was cushioned by a slew of responses in Washington last year, with more action expected in the year ahead, according to Jamie Hopkins, managing director of Carson Coaching and director of retirement research at Carson Group.
In a recent webcast, Hopkins spoke about last year’s stimulus bills, such as the Coronavirus Aid, Relief and Economic Security Act, as well as some of President Joe Biden’s campaign promises, intended to help fund Social Security, that could affect the tax bills of high-net-worth clients.
“Our job as advisors is to look at the facts, look at what the planning opportunities are, keep looking long term and moving people towards those goals, including ourselves,” Hopkins said.
With COVID-19 “still here,” and affecting all parts of the economy, tax issues are key, Hopkins said. He also noted that clients making more than $400,000 a year will feel the biggest impact from Biden’s proposals.
A University of Oregon study, for instance, found that taxpayers earning $400,000 or less would see a drop of 1% in after-tax income under Biden’s tax proposals.
“So relatively nothing,” Hopkins said. However, those over that $400,000 threshold, or the top 1.5% of earners, could see a 17.7% decrease in after-tax income.
“Most of that would be due to Social Security [taxes] and corporate rate hikes,” Hopkins explained, adding that the Tax Foundation expected a 7.7% decrease for top earners.
Check out the gallery above for some of the key areas he discussed that advisors should watch.
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