Taxes expected to rise under a Clinton Administration
It is widely expected that should Hillary Clinton enter the White House in January that taxes for the wealthy will rise. Clinton suggests that taxes will be higher for those Americans who earn more than $250,000. For those who are earning more than $5mm per year Clinton moots that there will an additional 4% tax levied.
For US residents this is an immediate hit to the bottom line. It is unknown as to which tax year Clinton might impose these tax rises and, as such, attention should be given as to whether one wants to crystallise tax liabilities this tax year rather than next.
For those Americans living in the UK the tax rises will probably mean that the highest US marginal tax rates will become more in line with the UK marginal tax rates and as such should not result in additional taxation. The key is ensuring that all US income taxation is off-settable against UK income tax under the US/UK Double Tax Treaty. Care should be taken as to crystallising tax liabilities in an attempt to shelter against US taxes if UK taxes are due on any investment portfolio. As a result of Brexit the UK tax liability on US portfolios is likely to have ballooned given sterling’s depreciation.
If these tax rises are passed the UK will become more attractive than the likes of New York and California as a tax destination as US Citizens living in the UK generally do not pay State or Local taxation.
For more details please click here to read a recent Bloomberg article on this topic.