How we're preparing for the incoming administration's tax plans.
This monthly series of articles describes the many steps and occasional missteps we have taken in building our financial advisory business, Garnet Group LLC. Currently, Garnet has eight staff members, more than 90 clients, more than $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the managing principals in the Garnet office in Bethesda.
Is 2008 an exciting year or a horrible year? However you look at it, 2008 will be seen by historians as a banner year. As we write this, so far this year, the Dow has spanned a range of 13,000 to below 8,000, dropping more than 50% in a three-month period. This year also marks the beginning of a sharp recession, possibly a depression as seen by some economic watchers. Whatever your political views, the 2008 presidential election results are historic and the Obama administration seems poised to implement many changes from policies of the Bush era. As we look ahead to 2009 and beyond we assess the impact of the new regulations on our clients.
The Obama Plan
From the administration's new Web site, here are some of the pieces of the Obama economic plan that, if passed, will impact our clients and our practices. The language is theirs, though we have made some attempt to remove the most biased words:
* Cut taxes for 95% of workers and their families with a tax cut of $500 for workers or $1,000 for working couples.
* Provide tax cuts for low- and middle-income seniors, homeowners, the uninsured, and families sending a child to college or looking to save and accumulate wealth.
* Families making more than $250,000 will pay either the same or lower tax rates than they paid in the 1990s. Obama will ask the wealthiest 2% of families to give back a portion of the tax cuts they have received over the past eight years. But no family will pay higher tax rates than they would have paid in the 1990s.
* Simplify taxes by consolidating existing tax credits, eliminating the need for millions of senior citizens to file tax forms, and enabling as many as 40 million middle-class Americans to do their own taxes in less than five minutes without an accountant.
* Eliminate capital gains taxes for small businesses, cut corporate taxes for firms that invest and create jobs in the United States, and provide tax credits to reduce the cost of healthcare and to reward investments in innovation.