Sunday, May 2, 2021

What Can I Do About New Tax Legislation?

 Lately there is a great deal of talk about new tax legislation, increasing Capital Gains Tax and taxes on corporations possibly rising to 28% thereby reducing profits and so starting a bleak period for stock market investors.

Tax, a pile of cash and a graph rising up to the right.

What can I do as an investor?

First don't Panic. 

At the moment it is just talk. As we know talk is cheap and the politicians are merely grandstanding for their supporters. This is just throwing some fear into the market and causing some selling of perfectly good stocks, actually making them more attractive for long term buy and hold investors, like me.

So not to look a gift horse in the mouth I am going out with a shopping list this week to buy in some good stock.

Changes in tax legislation will take months of negotiation so there is no immediate cause for alarm.

When the politicians finish with their  pontification to their base, there will be some adjustment to their promises as the Bill writers come on the scene, then lobbyists will get the politicians to change a little here and there. Scrap a pork belly from the barrel in one or two places. Then the whole plan will have to go through committees and votes.

If we only knew how that would go.  

Then finally in a year or two, a new tax Bill may be signed into law, heralded as a triumph of fairness over greed.

Then the company accountants get to play with the loopholes.

In the end we will all adapt to the new legislation.

All the worry will have been for nought.

So don't worry until the legislation has passed. But even then what we know will be less fearful than all of the talk we are hearing now.

This is not tax advice. I am an individual investor not a tax expert. This is merely my own opinion and you should consult your own tax advisor or financial planner before acting on any item in this blog post.

All the best.