This week, I’m talking about investing in an election year. 

As I record this podcast a couple weeks in advance, I don’t yet know the outcome of the election. Something I’ve already touched on this week is the importance of tax and estate planning before the tax laws change. 

This is especially true if Biden is elected president, but it’s also true I think if Trump remains in the White House for another 4 years. Let me explain…

If Biden is elected, and especially if Congress is controlled by democrats, you’re likely to see higher taxes. Biden campaigned on this, and especially with all the stimulus money being pumped into the economy because of COVID, taxes seem very likely to quickly change course and go higher. 

Even if Trump remains in the White House or if Congress is controlled by Republicans, taxes are still likely to go higher. It may take longer for taxes to increase with Republicans in control, but our national debt is increasingly unsustainable and economic growth may not be robust coming out of the Covid recession to grow our way out of the debt. 

This reminds me of what George HW Bush said in 1988: “Read my lips. No new taxes”. But 2 years later, he made a deal with the Democrat-controlled Congress to increase taxes as a way to reduce the national budget deficit.

Hmm, does any of this sound familiar?

If history is any guide, higher taxes are probable looking out on the horizon. 

This means that 2020 is an important year to do some planning and gifting, especially if you are wealthy. As I talked about a couple months ago on the podcast when I covered gift taxes, 2020 is an ideal time to do some gifting and estate planning, especially if your estate will likely be worth millions, you have a valuable business or other assets that may be subject to high estate taxes down the road. 

The estate and gift tax environment has never been better than it is today, and no matter which party controls the government over the next few years, the clock is ticking to pass along wealth in a tax-efficient way to the next generation.

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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