Breakfast session -

A post-election outlook on taxes and personal wealth planning

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Session recap

Planning for “what if”: taxes and wealth planning post-election

There’s scant time — just six weeks — to develop and implement tax and personal wealth plans before year’s end. With so many tax-related issues still unresolved in Washington, DC, “what if” scenario planning is imperative and entrepreneurs should focus on personal taxes, corporate taxes and estate taxes, according to a panel discussion at the Forum, “A post-election outlook on taxes and personal wealth planning.”

Elda Di Re, Partner and Tax Leader, Personal Financial Services, Ernst & Young, noted that the presidential election results ensure that Obamacare will become effective January 1, 2013. “It calls for a 3.8% excise tax on net investment income for people making more than $250,000 per year. It also calls for a 0.9% Medicare payroll tax increase on the earned income of households earning at least $250,000,” she said.

Di Re predicted that if nothing else happens, there will be tax increases for the highest ordinary rate from 35% to 39.6%; on capital gains from 15% to 20%; and, the largest increase, on qualified dividend income, from 15% to 39.6%. Also, 2013 would see a phaseout of personal exemption for high-income taxpayers and a limitation on the total of itemized deductions based on income.

What’s next?
Possible outcomes include an extension of the rates for six months or a year, or a compromise between the Democrats and the Republicans. “We’re hearing that there might be some sort of compromise that redefines ‘high-income taxpayer’ as being someone who earns more than $250,000,” Di Re added. “Or maybe it will limit the number of itemized deductions a person can take.”

Uncertainty makes tax planning prior to year-end a challenge, but you can’t afford to wait. Karla D’Alleva Valas, Managing Director, Complex Asset Group, Fidelity Charitable, said charitable donations are useful, particularly donor-advised funds, which allow you to give when it makes sense.

Big changes are also afoot for corporate taxes, said Bobby Stover, Jr., Southwest Sub-Area Leader, Personal Financial Services, Ernst & Young. These range from changes to research and development tax credits and bonus depreciation to revisions to the rates, possibly ranging from 25% to 28%.

Ernst & Young Partner Greg Rosica said tax policy could also impact estate planning. “It’s not just a mathematical exercise — there is a strong emotional aspect to estate planning, which is about succession and rewarding family members by transferring ownership.”

As the debate over tax issues rages in Washington, DC, moderator David Boyle, Americas Leader of Personal Financial Planning Services, Ernst & Young LLP, advised raising tax issues to Congressional representatives. When it comes to setting tax laws, “if you’re not at the table, you’re on the menu.”


Karla D'Alleva  Valas photo

Karla D'Alleva Valas
Managing Director, Complex Asset Group
Fidelity Charitable

Elda Di Re photo

Elda Di Re
Partner, Tax Leader, Personal Financial Services
Ernst & Young LLP

Robert (

Robert ("Bobby") A. Stover, Jr.
Southwest Sub-Area Leader, Personal Financial Services Practice
Ernst & Young LLP

Greg Rosica photo

Greg Rosica
Ernst & Young LLP


David Boyle photo

David Boyle
Americas Leader of Personal Financial Planning Services
Ernst & Young LLP