Hello, this is James Mayer, Branch Manager from the Huffman Mayer Paolo Wealth Management Group of Wells Fargo Advisors.
We learned in mid-September that the new tax plan may not be as aggressive as many had feared. According to FactSet, this proposal from the House's Ways and Means Committee calls for a maximum tax rate of 25% on long-term capital gains and dividends, versus the previous maximum of 20%. The plan would increase the highest tax rate on ordinary income from the current rate of 37% to a new high of 39.6%, undoing the cuts from the Tax Cuts and Jobs Act of 2017. The proposal would not eliminate the stepped-up cost basis rule. Also under this proposal, the estate tax exemption would revert to roughly $6 million per person, versus the current $11 million per person.
The US Stock Market has started September by taking a breather following an extremely strong 10 months of performance. Fears over the Delta variant of COVID-19, possible tax hikes and concerns around consumer confidence and spending have all been cited as possible catalysts for the sell-off.
During the second week in September concerns around China's bond market became amplified as one of the country's largest borrowers warned that it may miss a payment on certain debts, which would qualify as a technical default. China's second largest property owner with over 1300 wholly owned properties and thousands more that it's an investor in, according to FactSet, this company has over $300 billion in total debt. This property owner has previously requested extensions with some of its major creditors and it remains to be seen what accommodations can be worked out.
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