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America’s millionaires are bracing for a tax hike next year, despite predictions of Washington gridlock and a Republican-led Senate, according to the CNBC Millionaire Survey.
Nearly two-thirds of millionaires say taxes will go up under a Biden administration, according to the survey, which questioned 750 people with investible assets of more than $1 million. And 43% say they already pay too much in taxes, according to the survey.
“I think the wealthy look at the spending for stimulus and the impacts of the virus and they recognize that some form of their taxes will increase for many years,” said George Walper, CEO of Spectrem Group, which conducts the survey with CNBC. “They’re realistic.”
President-elect Joe Biden campaigned on a promise to raise taxes on those earning more than $400,000 a year. Yet with the Senate likely to be split or remaining under Republican control, passing any major tax overhaul appears less likely.
Still, with deficits and spending soaring, many of the wealthy expect some form of tax increases to offset the costs. Walper said that even if federal income taxes don’t increase, states and local governments may have to hike taxes to offset the lack of new federal aid.
“You look at real estate taxes, those could go up,” Walper said.
When it comes to tax fairness, America’s millionaires feel they already pay enough. While 50% say they feel the amount they pay is fair, 43% say they pay too much, while 8% say they pay too little.
At the same time, they feel that Biden’s income threshold of $400,000 for tax hikes is the right level. More than half said the $400,000 cutoff was “about right,” while roughly equal numbers (22% and 26%) say it is either too high or too low. The responses, however, differed by political party. Only 11% of Democrats said the $400,000 threshold was too low, compared with 38% of Republicans.
Despite predictions that the wealthy would sell stocks or make major changes to their estates due to Biden’s tax plan, millionaires plan few changes to their investments or financial planning as a result of potential tax increases. Only 17% planned to sell stocks in 2021 as a result of potential tax changes. With Biden advocating for an increased estate tax, 16% plan to make changes to their giving or estate planning.