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U.S. millionaires predict a tax hike next year, despite predictions about the blockade of Washington and the Republican-led Senate, according to the CNBC Millionaire Survey.
Nearly two-thirds of millionaires say taxes will rise under a Biden administration, according to the survey, which questioned 750 people with more than $ 1 million in reversible assets. And 43% say they already pay too much in taxes, according to the survey.
“I think the rich are looking at stimulus spending and the impacts of the virus and recognize that some kind of their taxes will increase for many years,” said George Walper, CEO of Spectrem Group, which conducts the survey on CNBC. “They’re realistic.”
President-elect Joe Biden campaigned with the promise of raising taxes on those earning more than $ 400,000 a year. Still, with the possibility of the Senate splitting up or remaining under Republican control, approval of any major tax review seems less likely.
Still, with deficits and spending rising, many of the rich expect some sort of tax increase to offset the costs. Walper said that even if federal income taxes do not increase, states and local governments may have to raise taxes to make up for the lack of new federal aid.
“Look at real estate taxes, these could go up,” Walper said.
When it comes to tax equity, American millionaires feel they already pay enough. While 50% say they think the amount they pay is fair, 43% say they pay too much, while 8% say they pay too little.
At the same time, they consider Biden’s $ 400,000 income threshold for tax hikes to be the right level. More than half said the $ 400,000 limit was “almost correct,” while roughly equal numbers (22% and 26%) say it’s too high or too low. The answers, however, differed by political parties. Only 11% of Democrats said the $ 400,000 threshold was too low, compared to 38% of Republicans.
Despite predictions that the rich would sell shares or make major changes to their estates due to Biden’s tax plan, millionaires plan few changes in their investments or financial planning as a result of possible tax increases. Only 17% had planned to sell shares in 2021 as a result of possible tax changes. With Biden advocating for a property tax increase, 16% plan to make changes to their donations or estate planning.