NOTE: This update is based on available public information known as of November 3, 2021. Circumstances may have changed or be changed thereafter.
President Biden recently announced a framework agreement with congressional majority leadership on the Build Back Better legislation.1 The framework includes a significant number of changes when compared to prior tax proposals.
The new moles2
The most relevant proposed changes for certain Aperio clients are a 5% surcharge on modified adjusted gross income (AGI) greater than $10 million and an additional 3% surcharge on modified AGI greater than $25 million.
Additionally, high-income taxpayers with large retirement account balances would face new rules and limitations on retirement contributions, required minimum distributions, and Roth conversions.
What’s not included
Just as important, a significant number of previous tax proposals were omitted from this most recent framework, including the following:
Making transfers during life and at death gain realization events
Increase in the top ordinary income tax rate
Increase in the top capital gains tax rate
Billionaire “mark to market” tax regime
Decrease in the gift and estate tax exemption
Changes to the grantor trust rules
In other words, the tax provisions included in this framework would likely be less severe for many Aperio clients than those in earlier tax proposals.
Things could change
The tax legislative environment remains extremely fluid, and additional amendments to the legislation may be made. Tax proposals now excluded from this framework, including some of those noted above, could still be added. We will continue to monitor the legislative process and provide updates as appropriate.
This material is provided for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are subject to change at any time without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations.
This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of yields or returns, and proposed or expected portfolio composition. Moreover, any historical performance information of other investment vehicles or composite accounts managed by BlackRock, Inc. and/or its subsidiaries (together, “BlackRock”) included in this material is presented by way of example only. No representation is made that any performance presented will be achieved, or that every assumption made in achieving, calculating or presenting either the forward-looking information or the historical performance information herein has been considered or stated in preparing this material. Any changes to assumptions that may have been made in preparing this material could have a material impact on the investment returns that are presented herein by way of example. Past performance is no guarantee of future results.
The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy.
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Lincoln Fleming, CFP, CPA, PFS
Senior Tax Economist
What are your key responsibilities? At Aperio, I focus on the intersection of taxes and investing and have three main responsibilities: I am a part of the research team and assist with tax-related research. I am a resource to aid internal colleagues and clients with tax-related questions and training. And I help come up with innovative tax strategies and solutions for our clients.
Describe your key previous work experience. I started my career in the PricewaterhouseCoopers (PwC) private client group, advising ultra-high-net-worth individuals, corporate executives, and owners of closely held businesses on comprehensive tax and wealth planning solutions. I worked in PwC’s San Francisco office and also spent two years in its London office. From there, I joined the Wealth Strategist Services team at Goldman Sachs in the Bay Area, where I provided tax and wealth transfer planning services and modeled out sophisticated wealth planning strategies for Goldman’s Private Wealth Management clients. I left Goldman to join Canopy Tax, a venture-funded tax software startup company near Salt Lake City, where I scaled and led a team of about 75 tax subject matter experts and helped build one of the first cloud-based professional tax preparation software products. Joining as an early employee and helping to scale the company to several hundred employees and raise more than $60 million in venture funding was a fantastic experience. After Canopy, I joined Squire Wealth Advisors, a boutique accounting and wealth management firm, where I helped individuals and families reach their financial goals through sophisticated tax planning and evidence-based investment strategies.
What is the most interesting aspect of the job to you? No two days at Aperio are alike. I also love the challenging projects and opportunities that help me to grow and develop as a person and as a professional.
Describe some noteworthy projects you have worked on that directly impact Aperio’s clients. I have assisted Aperio clients and prospects with a wide variety of issues. Examples include qualified small business stock planning, cross-border tax planning, wealth transfer planning, charitable giving planning, and planning for potential tax reform. I have also aided with research about the benefits of tax-loss harvesting for different types of taxpayers.
What do you like most about working at Aperio? I am surrounded by brilliant colleagues and wonderful clients I learn so much from every day. I also value being a part of an ethical organization that strives to always do what is right and puts the interests of the client first. Finally, I love being a member of such a close-knit, high-performing team.
List any committees or organizations you are a member of outside Aperio. I am a member of the American Institute of Certified Public Accountants (AICPA) and the Salt Lake Estate Planning Council.
What are some non-work-related things we should know about you? I love spending time with my wife and six children. I also enjoy reading, spending time in the mountains, attending Broadway performances, and following college sports.
What postsecondary degrees and/or professional certifications do you possess? BS in Accounting from Brigham Young University; Master of Taxation from Brigham Young University; Graduate Certificate in Estate Planning from Golden Gate University; Certified Public Accountant (CPA), Certified Financial Planner (CFP®), and Personal Financial Specialist (PFS) designations.
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