Capital gains taxes

(Bloomberg) — An unpleasant surprise for wealthy Americans lurks halfway through a 114-page document released by the U.S. Treasury late last month.

It’s counterintuitive, but the cash benefit of delaying payouts can outweigh rate increases, thanks to compounding over time.

The proposed changes are worrying investors and their tax advisors, especially the possibility of making them retroactive.

Even with a 15-year window to pay taxes, a near-doubling of the capital gains rate and the elimination of the step-up in basis loophole will make a sale expensive.

Individuals have already started receiving requests for information, according to tax attorneys.

"Inheritors are going to get killed" under the White House’s proposal to put the brakes on tax-free intergenerational transfers of wealth.

Biden’s approach might be politically astute, but from a fiscal-design point of view, it’s partially self-defeating, Bloomberg’s Clive Crook writes.

Instead of hitting heirs with a hefty tax payment at the time of a benefactor’s death, one proposal would allow the beneficiaries to defer the bill.

President Biden releases his annual budget on May 27, a move likely to detail his plans to increase the capital gains tax rate and eliminate a lucrative benefit for inherited estates.

Affluent clients can use wealth and retirement strategies to blunt the impact of the administration’s proposals, which include a higher capital gains rate.