Sell Sooner There’s Never Been a Better Time for Business Owner to Make a Move
Now that the election is over, some Americans are worried that they’re going to have to pay more in taxes in the near future. During the campaign, President-Elect, Joe Biden, wasn’t shy about telling the American public that he wants to raise taxes on the wealthy. That’s a big part of his overall tax plan. Biden has repeatedly said he won’t raise taxes on anyone making less than $400,000 per year.
Election 2020: Joe Biden’s Tax Plans
Also remember that the President can’t raise or lower taxes on his own. Congress has to pass legislation to adjust taxes and then send the bill to the President for a signature. Since the Republicans might control the U.S. Senate for at least the next two years, Biden is going to have a tough time getting his tax proposals enacted into law. He might also decide to wait before attempting to raise taxes. He’ll need to focus on COVID-19 issues right off the bat, and raising taxes before the economy recovers is risky. Having said all that, let’s take a look at some of the people who should be the most concerned about tax increases once Biden takes office.
Tax Policy and Mergers & Acquisitions Under President-elect Joe Biden’s Administration
President-elect Biden has proposed increases to the corporate tax and individual capital gains tax rates, so Business Owners (“Sellers”) would be motivated to sell in a lower-tax environment, thereby accelerating deals. Biden has also proposed eliminating step-up in basis for estates. Combined with an increase in capital gains rates, that would provide substantial incentives for privately-held businesses to sell sooner than later.
And following a tax rate increase, there would likely be an increase in joint ventures and alliances, as companies would look for structural alternatives to buying and selling in a high-tax or less tax-efficient environment.
Additionally, Biden has proposed a reversal of the Tax Cuts and Jobs Act of 2017, including the elimination of immediate expensing of capital expenditures.