Investors are concerned about the tax impact of the health care reform legistation and the stimulus package
The Americans who will pay the biggest portion of the bill for both health care reform and the stimulus package are deeply concerned about the impact all of this legislation will have on their taxes.
While other factors are often identified as the cause of decreased consumer spending, it would not be a stretch to infer that many affluent households are reducing their spending until they are certain of the upcoming tax burden they will bear.
In research conducted in late July 2009, it was found that 67% of individuals with $500,000 of investable assets felt that the health bill will have a severe or serious impact on their taxes. Only 8% believe that there will be no impact on their taxes.
As of year end 2008 there were approximately 7.4 million households with $500,000 of investable assets. Investable assets include the money one may have saved in their 401(k) or their IRA as well as other assets invested in various securities or savings accounts. They represent a vast multitude of households. For example, the most common occupations for individuals with $500,000 to $1,000,000 of assets is Educator and Manager. While clearly the wealthiest households will be impacted by the taxes created under the proposed legislation, a large number of Americans considered to be mass affluent will also be impacted. Recent versions of the bill were proposing a surtax on households with over $250,000 of income.
As the economy struggles to flip to the positive side, it is clear that the legislative uncertainty happening in Washington is threatening the attitudes of the households who are critical to increasing consumer spending.