Jun 18, 2010
The Impact of the Coming Tax Hikes on Capital Gains and Income
Do you really understand the impact of the coming tax hikes on capital gains and income?
Our office has been working on a five-year business plan for a client that has really exposed the impact of the tax increases coming in 2011 and 2013.
Not only are increases in capital gains taxes going to take a bigger bite out of the proceeds of the sale of a company, but coming increases in income taxes and health-care taxes will take a bigger bite out of the income to owners who continue to own their companies.
We are all aware that the expiration of the Bush Tax Cuts will increase capital gains rates in 2011. For a company owner who is a resident of Minnesota, this will cause a 6.5% reduction in the after-tax proceeds the owner will take away from a sale. Not everyone has noticed that the new Health Care bill also increases capital gains beginning in 2013. When this kicks in, owners will take home 11.4% less compared to today’s tax rates. This means that the company must be worth 6.5% more next year and 11.4% more 2 years later, just to stay even. Read the rest of this entry »




