Election

Greetings! In this post, I'm excited to share some valuable insights gleaned from my recent attendance at the Raymond James national meeting in Washington D.C. Among the highlights was a thought-provoking presentation by Bill Cass, the Director of Wealth Planning at Franklin Templeton Funds, on planning considerations in light of potential election outcomes.

Before diving into the specifics, it's crucial to clarify that Bill Cass didn't attempt to forecast election results but rather explored potential legislative paths depending on the election outcome.

Let's start with the scenario of a divided government, akin to our current landscape, where one party holds the presidency while the other controls Congress. Historically, such setups have been favorable for markets due to the necessity of negotiation and compromise. In this scenario, attention would likely turn to issues such as current gift and estate taxes, the Alternative Minimum Tax (AMT), and the fate of pass-through income for business owners with the expiration of Qualified Business Income (QBI) provisions. Notably, the fate of the expiring Tax Cut and Jobs Act (TCJA) would loom large. Remember, that Tax Cut and Jobs Act signed into law by President Trump is set to expire. We would expect to see small compromises, not large sweeping changes.

Now, envision a scenario where the GOP secures a sweeping victory. Their primary focus would likely revolve around extending the TCJA, a move projected to come with a hefty price tag and significant political hurdles. Expect discussions around funding mechanisms or potentially a scaled-back version of the TCJA.

Conversely, in the event of a Democratic sweep, priorities would likely shift towards modifying the TCJA, possibly with an emphasis on corporate tax rates and adjustments to tax brackets for high-income households. The treatment of State and Local Tax (SALT) deductions remains a contentious issue within the Democratic party. Additionally, initiatives like Build Back Better could gain momentum.

It's worth noting that both parties, regardless of the election outcome, find themselves in their final terms, potentially emboldening them to pursue more ambitious agendas without the constraints of reelection concerns.

While the specifics of each party's tax platform remain fluid, Franklin Templeton underscores these key points as potential areas of focus.

If you're intrigued or have questions about how these potential scenarios might impact your financial situation, I invite you to reach out for a deeper discussion. And if you're not already a client, why not schedule some time to come in and chat with me?

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Gary Hoenig and not necessarily those of Raymond James.