The elections are coming up fast and with the current state of the country, we can expect a lot of changes to take place soon after the election, regardless of the outcome. Many of these changes will impact you financially so you want to prepare now.
2020 has given up one of the largest stimulus packages in history and there are talks of another package to come. This means our budget deficit and national debt have never been greater and we can expect it to grow rather than shrink in 2021. That stimulus will need to be paid back and what this means for most Americans, is required revenue in the form of taxes.
COVID-19 caused shutdowns across the country that led to a huge swell in unemployment. Higher unemployment means less payroll and income taxes collected, and a drop in sales tax collection due to reduced consumer spending. Regardless of who wins the election, the government is gong to need to find more revenue through taxes. On a state-level, we can expect to see an increase in sales, real estate, and income taxes.1
If Trump get reelected analysts provide two theories:
- In the case that Congress remains split as it is now, the federal tax policy will either be met with gridlock or compromise.
- In the case that Congress turns red, there will be an enormous push to raise revenue on foreign entities through tariffs and trade deals. Support for American-made products and manufacturing should rise again.
If Biden get elected the analysts have a different theory:
- If the Congress remains split and we have a Democrat for president, we can expect the income tax system to be overhauled and moved in a more progressive direction. This means putting more on the burden on the wealthy in the form of higher tax rates for higher earners.
- In the case of a blue congress, analysts predict an overhaul of the tax codes which likely include changes to estate and inheritance taxes and there is even talk of implementing a national sales tax.
The common denominator? Tax changes to repay the debt.
How can you protect your retirement savings and adjust your plan? The election is only weeks away, so reviewing your retirement accounts and ways to take advantage of the current low-income taxes plus considering changing your charitable donations to help with tax brackets in 2021 is suggested. Contact our office and let’s secure your retirement nest egg today.