Featured Advisor
Ed Meek founded Edge Portfolio in 2005. Prior to that he was the Senior Financial Consultant and Account Executive at Fidelity Investments Private Access Group, Oak Brook for 11 years. In his downtime, Ed enjoys spending time with his wife and three kids, playing and following basketball, playing golf and participating as an advisory board member for Breakthrough Urban Ministries.
Srbo Radisavljevic joined Edge Portfolio in Jan 2011. Prior to joining Edge, Srbo was the founder and...
Tax increases appear to be a growing likelihood for America’s wealthiest citizens but not all high net worth investors are taking steps to shelter their investments from taxes.
Nearly three-fourths of investors with a net worth of $5 million to $25 million say they are worried about tax increases, but only 44 percent say they plan to change their investment strategies because of tax concerns, according to Millionaire Corner research.
No one can say with any certainty whether taxes will increase in 2012, but increasing budgetary and political pressures are pointing that way. Attempts by a Congressional Super Committee to reduce the staggering federal deficit have become mired in politics, while extensions to federal income tax cuts imposed by the Bush administration are set to expire next year. Economists are also waiting to see whether Congress will maintain a reduced payroll tax in 2012. The tax, which funds Social Security, was cut by 2 percentage points to 4.2 percent in 2011 as an economic stimulus measure.
Support appears to be building for a fiscal policy that would increase taxes on the nation’s top earners. Both activists fighting for social justice and members of the top 1 percent – most notably billionaire investor Warren Buffett – have called for increasing taxes on the rich. Nearly 48 percent of affluent investors surveyed by Millionaire Corner in October support raising taxes on individuals with more than $250,000 in income as a strategy for improving the economy. Nearly 70 percent of the 843 investors – who have a net worth from $100,000 to over $1 million, not including primary residence – approve of raising taxes on individuals with more than $1 million in income.
Against this backdrop, only half of the high net worth the Millionaires surveyed in the third quarter by Millionaire Corner said they have discussed implementing tax-advantaged strategies with their financial planners. Nearly 30 percent said they have been advised to find tax-free investments. Thirteen percent said they have received tax advice from someone other than their financial advisor, and 13 percent said they plan to seek this advice in the future. Twenty-four percent said they do not need advice on tax-advantaged investing.
In a September survey, more than 80 percent of investors with a net worth of at lease $1 million said they believed tax increases were inevitable. As a result, more than 30 percent said they plan to invest in more tax-free products, such as municipal bonds. Ten percent will start or increase investment in an employer-sponsored retirement and a similar percentage plans to start or increase investing in an IRA. Less than 8 percent plan to increase the charitable giving in response to probable tax increases.
