Millionaires prepare for a tax hike in 2021

American millionaires are preparing to raise taxes next year, despite expectations of deadlock in Washington and the Republican-led Senate, according to CNBC Millionaire Survey.

Nearly two-thirds of millionaires say taxes will rise under the Biden administration, according to the survey, which questioned 750 people with investable assets of more than $ 1 million. And 43% say they are already paying a lot of taxes, according to the survey.

“I think the wealthy are looking at the stimulus spending and the effects of the virus with the realization that some forms of taxation will increase for many years,” said George Waler, chief executive of Spectrem Group, which is conducting the survey with CNBC. “They are realistic.”

President-elect Joe Biden He campaigned on a promise Increase taxes on those earning more than $ 400,000 a year. However, with the Senate likely to split or remain under Republican control, passing any major tax reform appears less likely.

However, with deficits and spending rising, many wealthy people expect some form of tax increases to offset the costs. Even if federal income taxes do not increase, Walper said, states and local governments may have to raise taxes to make up for the new federal aid shortfall.

“You look at real estate taxes, it could go up,” Waller said.

When it comes to tax justice, millionaires in America feel they are already paying enough. While 50% say they feel the amount they pay is fair, 43% say they pay too much, and 8% say they pay too little.

At the same time, they feel it Biden’s income threshold of $ 400,000 for a tax increase Is the right level. More than half said the $ 400K amount was “nearly correct,” while roughly equal numbers (22% and 26%) say it is either too high or too low. However, the responses differed by political party. Only 11% of Democrats said the $ 400,000 threshold was too low, compared to 38% of Republicans.

In spite of Predictions that the wealthy will sell stocks or make major changes to their real estate Because of Biden’s tax plan, millionaires plan to make minimal changes to their investment or financial planning as a result of potential tax increases. Only 17% plan to sell shares in 2021 as a result of potential tax changes. With Biden calling for an increase in the property tax, 16% are planning to do so Making changes to the tender or estate planning.