President Biden’s address to congress this week in regards to his American Jobs Act and American Families plan was based on competition. In order to compete on the world stage to “win the 21st century,” Biden laid out the benefits of his plans that will add infrastructure jobs (many which won’t require higher education) and support for families who need care and education for their children.
Biden claims the funding of these vast missions will not add a dime to the national deficit but will instead be “reclaimed” from the wealthiest 1% of Americans in the form of taxes. Not only does he propose to raise the federal income tax on Americans who make over $400k back to what it was when George W. Bush was in office, but his plan intends to crack down on any malicious bending and more so breaking of the tax laws by corporate America and wealthy individuals.
The piece of information most awaited by American investors was his proposal to raise the tax on capital gains. Biden clearly states it is unfair that millionaires and billionaires can keep more of their investment profit in their pockets than middle class Americans can keep of their paycheck.
While the approval of the proposed plans and their funding, especially as is, is still far off, many investors may be looking for ways to stabilize their long-term capital gains plans and should be looking to QSBS as an answer.
It was, after all, the Obama administration who raised the tax exemption back in 2012 with The American Taxpayer Relief Act, first to 75% for eligible QSB stock acquired after February 17, 2009, and then again to 100% on capital gains for QSBS acquired after September 27, 2010. Because of this piece of history along with Biden’s plan to “grow the economy from the bottom and middle out,” it is only natural to assume that Biden’s plan will protect that tax exclusion.
While the long-term benefits of QSBS don’t kick in until stock is held for 5 years as opposed to the 1 year in traditionally traded stock, the ability to exclude up to 100% of taxes up to $10mm or 10x your initial investment may be exactly what investors need to restructure their portfolio and offer that peace of mind come retirement time.
Looking for specific advice on QSBS? Contact us to learn more.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.