I find myself in the unfamiliar position of saying “It’s not real!” to the wide range of voices talking about the ‘Biden tax changes’. We (that is, the large majority of experienced tax professionals who earn their living talking about the future of taxes) have been saying that there are no significant change in the taxes affecting most of our clients in 2022 and the foreseeable future.
I found this advertisement for a professional continuing education course. Notice the program description says “proposed” and “set to” but nowhere does it say or directly imply that any of this is a real event that we should consider in our financial planning. Any such assertion as being highly speculative and outside of the range of consensus forecasts.
This week in “It’s Your Money” show, I addressed this when host Martin Saltzman brought up the fear of tax increases. Consider the political forces working against tax increases. This week the Wall Street Journal carried an opinion piece summarizing the Republican Party argument on why tax rates should not increase. My recent blog post discussed the Biden administration resolve to not raise taxes on those with income under $400,000. While we do forecast eventual future tax increases, it is unlikely to come up in any of the ways currently in current or proposed laws.
So now maybe I need to add:
- Just because the U.S. Treasury puts it on their web site doesn’t make it real
- Just because it’s on the White House web site doesn’t make it real
- Just because it was made law in the past to become effective in 2026 doesn’t make it real
- Just because it’s on Fox News doesn’t make it real
- Just because it’s taught to accountants doesn’t make it real
Again, to repeat, except for a possible change in Roth IRAs for the highest income people (not the majority of my client base), I do not see any federal tax change in the future worthy of incorporating into our tax planning. Eventually we may need to revisit the issue. For now, plan for stable taxes.