(Financial Planning) - As tax increases careen their way through Congress, a surprising takeaway has emerged for financial advisors with clients who are affluent but not Jeff Bezos-rich: Contrary to expectations, many investors don’t have much to worry about. And while a few do, it’s nowhere near as bad as they feared.
Nearly 4.8 million people making between $369,300 and $884,900 would pay $4,340 less in federal tax starting next year under the tax and spending bill approved with last minute changes by the House of Representatives the week before Thanksgiving, according to the Urban-Brookings Tax Policy Center. That clutch of Americans, that falls just below the 1% highest income earners, typically has a net worth that exceeds earnings once homes and retirement accounts are added in.
Sometimes called the mass affluent or high net worth — definitions of those groups vary — it's a coveted group of clients for financial planners and wealth advisors. And so far, many of them are off the hook from the tax hikes embedded in the Biden administration’s $1.8 trillion Build Back Better Act. The legislation, which is making its way to the Senate for approval after the House passed it on Nov. 19, already scrapped earlier proposals that would have dented the mass affluents’ take-home pay.
By Lynnley Browning
November 30, 2021
