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Navigating Possible Tax Policy Changes


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Congressional debate continues to shape the form of potential tax policy changes designed to fund President Biden’s proposed “Build Back Better” spending package.

Currently, the Democratic Party is working toward a $1.75–$1.9 trillion bill, down from the original $3.5 trillion plan the White House proposed. To fund the proposed spending package, two notable bills have been put forth in the House:

  • September: House Ways and Means Committee Bill
    Designed to fund a larger $3.5 trillion bill, this bill called for notable tax changes like increasing the individual, corporate and capital gains rate, limiting grantor trusts, and reducing the gift and estate exemption, among others.
  • Late October/Early November: House Rules Committee Bill
    Revenue-raising measures in this reduced $1.75 trillion bill include a surcharge on individuals and trusts, expanding the Net Investment Income Tax, and IRA restrictions, among others.

In this updated report, we discuss the most significant potential changes for individuals, provide analysis surrounding their impacts and offer corresponding wealth planning strategies.

At the time of writing, the “Build Back Better” package and its specific proposals’ political pathway remains uncertain, complicated by several complex, and rapidly evolving, Congressional dynamics. Omission of previously proposed measures in the latest House Rules bill does not imply that they are off the table for future legislation.

We continue to advise that it is far better to plan than predict, as the political environment suggests that some degree of change is probable. As such, we will continue to communicate on the latest proposals and corresponding advice as developments merit.

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This document is a general communication being provided for informational and educational purposes only and is not meant to be taken as investment advice or a recommendation for any specific investment product or strategy. The information contained herein does not take your financial situation, investment objective or risk tolerance into consideration. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal, accounting or tax advice from their own counsel. Any examples are hypothetical and for illustration purposes only. All investments involve risk and can lose value, the market value and income from investments may fluctuate in amounts greater than the market. All information discussed herein is current only as of the date of publication and is subject to change at any time without notice. Forecasts may not be realized due to a multitude of factors, including but not limited to, changes in economic conditions, corporate profitability, geopolitical conditions or inflation. This material has been obtained from sources believed to be reliable, but its accuracy, completeness and interpretation cannot be guaranteed. Northern Trust and its affiliates may have positions in, and may effect transactions in, the markets, contracts and related investments described herein, which positions and transactions may be in addition to, or different from, those taken in connection with the investments described herein.

LEGAL, INVESTMENT AND TAX NOTICE. This information is not intended to be and should not be treated as legal, investment, accounting or tax advice.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Periods greater than one year are annualized except where indicated. Returns of the indexes also do not typically reflect the deduction of investment management fees, trading costs or other expenses. It is not possible to invest directly in an index. Indexes are the property of their respective owners, all rights reserved.

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