CINCINNATI, Oct. 13, 2016 /PRNewswire/ -- The year
George Washington was elected
President of the United States,
Benjamin Franklin wrote, "In this
world nothing can be said to be certain, but death and taxes." But
he never said which taxes. And as voters head to the polls this
November, that uncertainty still remains.
In a new roundtable discussion, Fifth Third Bank (NASDAQ: FITB)
seeks to ease such uncertainty by offering insights from investment
industry experts. The general consensus offered by veteran
economist Joe Gagnon, wealth planner
Melissa Register and investment
strategist Jeff Korzenik is that
while both presidential candidates propose significant changes to
the tax code, smaller policy changes are a more likely outcome.
"Tax questions in election years often spark fears of higher
levies and lower exemptions, which can make planning for the future
difficult," says Register, senior wealth planner from Fifth Third
Private Bank in Cleveland.
This year is no different. Democratic candidate Hillary Clinton has said that her administration
would raise taxes on the wealthiest households, while restricting
deductions on a means-tested basis, and extending the holding
period required for investments to qualify for the capital-gains
tax rate. Republican candidate Donald
Trump has made a number of tax proposals on the campaign
trail, including a plan to cut the number of tax brackets, and to
dramatically increase standard deductions.
"There's some really healthy things that will come out of this
election no matter who is elected," adds Korzenik, Fifth Third
Private Bank's Chief Investment Strategist.
Big Reforms Face Uphill Battle
But large-scale changes
to the tax code may not be in the cards, says Danielle English, government affairs officer for
Fifth Third Bank in Washington,
D.C. "Regardless of the outcome at the top of the ticket, it
is still difficult to predict the terms of a congressional
agenda."
Donovan says that when clients come to him with fears about
changes to the tax code, he advises them not to expect any big
changes immediately after the election. The kind of policy changes
that are meaningful to his clients will often find their way into
legislation without much fanfare. He cites the recent change in
Social Security file-and-suspend rules as an example.
In addition, Donovan says many of his clients fear that the
tax-free growth in a Roth account will eventually be taxed if the
government comes to need the revenue. "Many of my clients don't
want to convert into a Roth for that reason," he observes.
The American Taxpayer Relief Act of 2012 went a long way toward
setting a fairly stable consensus about many elements of the tax
code, such as the estate tax, after many years of intense debate,
says Melissa Register, a senior
wealth planner for Fifth Third Private Bank in Cleveland.
It's All About the Details
While large-scale tax
reforms may be unlikely, the election and any changes it brings to
the balance of power in Washington
may have the biggest impact on the little things.
Business taxes, which don't often make headlines, are one area
where uncertainty is causing some owners to suspend their long-term
planning. Glen Johnson, managing
director at Mirador Family Wealth Advisors, has many business
owners among his clients, and they are very close watchers of
corporate tax policy reform.
As more U.S. companies choose to domicile in countries with
lower taxes, corporate tax policy has become a political football.
To reduce the appeal of overseas tax havens, Clinton would levy
"Exit Taxes" on companies who leave the U.S., while Trump has
proposed capping the tax on business profits at 15%. Regardless of
who wins the election, either plan is likely to face fierce debate
in Congress.
While proposed changes to personal income tax rates draw a lot
of attention, other important elements of tax policy tend to go
unnoticed, Register says. That's especially true for the
sophisticated techniques that tax planners often use. But the IRS
is very aware of those provisions, and is always looking for new
revenue. That's why Register worries about what she calls "death by
1,000 cuts." For example, lawmakers have had their eyes on a number
of lesser-known planning techniques such as grantor retained
annuity trusts, or GRATs, for years.
"The ability to use these techniques could disappear very
quickly; it goes up in a bill, and boom, it's passed. Advisors need
to be aware when those are on the chopping block," she says.
Beyond the speeches and the party platforms, it's in the
under-the–radar provisions, deductions, exemptions, exclusions and
policy tweaks that the election will likely have its most profound
effect on the tax code.
For more on the potential impacts of Election 2016, Fifth Third
Private Bank has compiled a helpful guide at
http://investing.53.com/FifthThirdPrivateBankElectionOutlook2016.
The five-part video and article series explores the major issues on
the line this November, and how the election may affect retirement,
the economy, investment strategies, taxes, and creating or
preserving wealth for the next generation for years to
come.
About Fifth Third
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio.
The Company has $144 billion in
assets and operates 1,191 full-service Banking Centers, including
94 Bank Mart® locations, most open seven days a week, inside
select grocery stores and 2,541 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West
Virginia, Pennsylvania,
Georgia and North Carolina. Fifth Third operates four main
businesses: Commercial Banking, Branch Banking, Consumer Lending,
and Wealth and Asset Management. Fifth Third also has an 18.3%
interest in Vantiv Holding, LLC. Fifth Third is among the largest
money managers in the Midwest and, as of June 30, 2016, had $305
billion in assets under care, of which it managed
$26 billion for individuals,
corporations and not-for-profit organizations. Investor
information and press releases can be
viewed at www.53.com/. Fifth Third's common stock is
traded on the Nasdaq® Global Select Market under the symbol
"FITB." Fifth Third Bank was established in 1858. Member FDIC,
Equal Housing Lender
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