Income that is earned through selling investment assets is subject to capital gains tax in the United States. For years, wealthy investors have been subject to a rate of around 20%, but after a proposed bill by US President Joe Biden, many investors are unhappy with the potential impact. Some are looking for new structures to protect their wealth. Others are saying goodbye to the US tax system altogether. In this article, we look at what is in that dreaded tax proposal and how you can work with our investment, tax planning, and financial professionals to find a solution that works best for you.
It is no surprise that when President Biden became the president, there was going to be some change to the taxation of the wealthy. Many US investors are re-examining their financial future after Joe Biden introduced a new capital gains tax proposal that could increase tax rates for wealthy families in the country. The current capital gain tax rate for wealthy investors is 20%. On April 28, 2021, Joe Biden proposed to nearly double the capital gains tax for wealthy people to around 39.6%. This tax change is targeted to fund a $1.8 trillion American Families Plan. For investors who make $1 million or more, who are already taxed a surtax on investment income, this change could mean their federal tax responsibility could be as high as 43.4%. This proposal has the potential to reverse a provision of the tax code that historically taxed returns investment income lower than labor.
This proposed capital gains tax plan would make it even harder to grow your wealth in the United States. This isn’t the only time the United States has planned to make it harder for wealthy investors. Many US investors are rushing to seek asylum from this tax treatment. Some are considering selling off some of their assets because of this tax spike. Contact Alpen Partners to find out how to create a financial plan that can help you save more on taxes. First, let’s look at one of the most popular ways American investors lower their tax responsibility.
There are many different ways US investors can lower their chances of being affected by this tax proposal, including selling certain assets, placing assets in trusts or other structures that could protect them, or relocating completely. Many of our clients take advantage of trusts because they can utilize them to combat some taxation and lower some taxes like estate tax and capital gains tax. A US trust can even hold foreign assets. Some high net worth individuals will incorporate a trust in their estate plan to ensure their assets are equally distributed between children or any other beneficiaries. Further, a trust can be used to gain more control over assets than with a standard will. We recommend looking into creating a trust even if you aren’t worried about the implications of Joe Biden’s tax proposal.
Another way our clients can fight adverse tax treatment is through relocating or expatriating. This involves relocating to a jurisdiction like Switzerland, Monaco, Dubai, or Singapore with favorable tax systems and are better climates for wealthy investors overall. For a permanent change, some investors will expatriate completely and renounce citizenship. Then, they are longer subject to the tax laws of their home jurisdiction and can enjoy life without the hassle of being taxed on money that you may not even be making in your home country.
Expats or investors who seek residence in other countries have the opportunity to achieve both personal and financial liberation overseas by tapping into new and developing sectors and developed areas of investment, allowing and encouraging wealthy individuals to diversify their portfolio. Every jurisdiction has its own way of earning residence or citizenship. Still, many offer residence through investment, each offering different options and perks in investing, starting a business, and tax benefits. To gain citizenship via an investment, the government may require you to invest a certain amount of money into sectors that could create jobs for the native residents. Making investments overseas for residency purposes is like killing two birds with one stone. You diversify your portfolio while gaining the residency you need to escape high taxes and high costs of living. Our experts can also assist in creating a relocation plan for you.
Are you looking to fight adverse tax treatment in an ever-changing environment that makes it nearly impossible to plan for the future? Alpen Partners, and our team of experts, can guide investors through the world of tax planning that will not only allow investors to protect themselves from unfavorable taxes but unlock potentially life-changing wealth management strategies such as restructuring or relocating offshore. Whether the task is choosing which tax plan offers the most benefits to an individual, assisting with the proper paperwork, or any other step in the process, our clients are taken care of. We work together with investors to ensure their dreams become a reality. Beyond tax planning services, our team can assist in all levels of financial and life planning for high net worth individuals, including expatriation and relocation, asset protection, portfolio diversification, and more. Contact the experts of Alpen Partners today.
No matter the problem, Alpen Partners will handcraft a solution for you. We know that there is no one-size-fits-all when it comes to financial success. Our approach involves working with our clients to make a unique plan to meet their needs. Rest assured that we will work hard to guide you through the process of meeting your financial and personal goals.
Contact us to enhance your financial plan today.