- Governor election results shape Senators’ tax decisions.
- Capital gain changes will unlikely occur until 2023.
- Original tax increase plans have been watered down.
Politics and capital gains—how are these related and what do changes in both sectors mean for the real estate industry? Rob Nowak, Partner in Tax Services at Weaver, and Howard Altshuler, Partner-in-Charge of Real Estate Services at Weaver, dove into this topic on this episode of Weaver: Beyond The Numbers podcast.
Recently, Virginia and New Jersey Governor elections took place, and these elections will undoubtedly shape future Congressional decisions and neighboring state Senators’ opinions on tax issues.
“What we have seen are numerous proposals that have gone through the budget reconciliation process, still through house ways and means, but through budget reconciliation as opposed to the formal budget legislative process that have watered down what initially proposed tax increases were,” stated Nowak.
Originally, capital gain rates for high earners in top brackets were set to mirror ordinary tax brackets and increase from 20 to 39 percent or more. After continued reconsiderations, any capital gain tax increase is now off the table. The proposal is to surtax the top earners in the form of a millionaire surtax and to impose a minimal tax on the wealthiest U.S. corporations in the form of a book tax. “The landscape has changed dramatically just through compromise prior to recent electoral activity,” said Nowak.
Ultimately, there will be an expense deduction change, but mostly clients will have an unchanged landscape of tax legislation and rates.
When should companies plan for changes? Nowak and Altshuler said the last 30 days of year are important, and because of the primaries in March of 2022, nobody wants to dive into tax raises during this time. If no changes occur by the end of the year, there will unlikely be changes until 2023 and 2024.