Back in October 2020, I wrote a column looking at the “tax the rich” mindset that legislators were embracing to solve states’ budget woes. I received a lot of mail from readers, mostly people who didn’t agree with my point of view that going after high-income taxpayers was not a sustainable approach to states’ fiscal challenges.
Unfortunately, the wealth tax is alive and well. Just last month Massachusetts passed a “millionaire’s” tax to drum up revenue from the state’s wealthiest residents. It’s a 4% surtax on income above $1 million.
Other states are sitting up and taking notice. California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington (all states losing population to no or low tax states) are all looking to capitalize on Massachusetts’ example. As our tax partner Steve Boultbee recently discussed in the San Francisco Business Times, California’s proposed wealth tax could make it harder for people to leave the state proactively in advance of an IPO or other liquidity event. It’s a conundrum for sure.
Of course, everything will have to go through the legislative process, and we’re keeping a close eye on new developments to help clients maximize tax efficiency and reduce tax liabilities, so they have the resources to invest in business growth. But in a climate like this, whether you’re an entrepreneur or managing a family office fund, it’s important to take a very long view of your business activities and personal decisions, like where to live.
As many of you know, we’re at the beginning of our first busy season of the year, as clients close the books on 2022.
The next step is planning for 2023, which for many of our clients will be concurrent. I encourage you to pick up the phone today and talk with your Marcum tax professional. We have a robust team of advisors who are working with many of our entrepreneurial clients to help them with their planning.
Let’s face it. No one likes paying taxes. But with the right planning and strategy, you and your business will be better-positioned for whatever is coming.