September 2021

Tax forms in a stack on a table next to a mug of coffee

From one of our trusted research sources:

It is being reported by the prominent political paper The Hill that “big Washington lobbyists have already succeeded in greatly watering down Biden’s tax plans, and perhaps eliminating their chances. Evidently lobbyists have done very well at getting middle of the road Democrats to turn against Biden’s tax plans. Biden’s plans include increasing long-term capital gains taxes to regular income tax levels and eliminating the “step-up in basis” at death in inheritance.

We are particularly enthusiastic about the possible dropping of plans to repeal the increase in the capital gains tax and the ‘step-up’ in basis from the value of holdings at date of death to using the original cost of the asset. The latter would impose a tremendous tax on family businesses, investments, farms, et. al. Imagine a farm held in a family for several generations being taxed based on the difference between what it cost when originally acquired in the 1800’s and its current value. Ugly!!

Let’s hope that the fight to prevent these changes is won for the benefit of all of us. It’s not a political issue—it’s a commonsense issue.

Market tenor remains positive, although somewhat long of tooth. We believe that companies with strong balance sheets and income statements, that generate well-covered and increasing dividends, will continue attracting investors, likely to the chagrin of the short term, less-than-well informed, traders (think Robinhood). As the old saying exclaims (here I go again with another chestnut), “No tree grows to the sky.”

The action/incident that is most likely to see increased market volatility would be an unexpected and/or large increase in interest rates initiated by the Fed curtailing its fixed income purchases. Should that happen, just hang on, as the issues in your portfolio would continue paying increased dividends, thereby adhering to the tenant that ‘any asset that increases your income regularly will appreciate over time.’

Follow-up to last month’s comment about shredding old records: Get the old files and papers ready. Our free shredding service will be available October 4th - 8th from 8:00 to 4:00. Invite your family members and friends to feel free to use the service also.

School is in session—watch out for kids at the crossings.

Previous Column: August 2021
Next Column: October 2021