Laurence Kotlikoff.
Get ready for higher tax rates at the national, state and local levels, especially to help finance the additional debt that governments have incurred during the COVID-19 pandemic.
"Whatever party is in power we're likely to see a significant increase in taxes or reduction in benefits for those who are wealthy," says Larry Swedroe, principal and director of research for Buckingham Strategic Wealth. "We almost certainly will see a dramatic increase in the wages that are taxed."
Swedroe, along with economist Larry Kotlikoff, spoke at a recent webinar on the pandemic's impact on wealth management at The American College of Financial Services moderated by Michael Finke, a professor of wealth management at the college.
According to the Committee for a Responsible Federal Budget, the U.S. budget deficit is expected to hit $3.8 trillion this fiscal year, and the federal debt — the total of all previous deficits — will reach 106% of GDP in 2022, the same record set in 1946.
As a result of its ballooning debt, the federal government might consider taxes that it never seriously contemplated before such as a value-added tax, carbon tax, or even a wealth tax, wrote Howard Gleckman, senior fellow at the Tax Policy Center, in a recent post. "Lawmakers may also look at new ways to tax assets of the wealthy at death," he wrote.
