Video Transcript

The Midterm Elections: Tax-Planning Takeaways
Mitch Drossman, National Director of Wealth Planning
Strategies, U.S. Trust.

Hello, I’m Mitch Drossman, the national director of wealth
planning strategies for U.S. Trust.

Many investors have been asking me about the tax and
wealth planning implications of the midterm elections and
the Republican majority in both houses of Congress. In
general, we expect a fairly stable tax environment for the
next several years.

So what specifically are we seeing post-election?

In terms of individual tax reform, we’re not
expecting anything to happen anytime soon. In fact,
any changes probably won’t be realistically addressed
until 2017.
Please see back page for important information.
U.S. TRUST | THE MIDTERM ELECTIONS: TAX-PLANNING TAKEAWAYS

In terms of Corporate Tax Reform, it’s too soon to
tell. Both parties want reform, and there is a fair
amount of commonality in Republican and
Democratic proposals.

But the devil is in the details as to where they differ.
They remain deeply divided on tax rates and whether
reforms should be revenue neutral or revenue positive
— let alone what counts as revenue.

Also, Congress will be distracted with policy items
that are considered “must pass” for the better part of
2015, such as government funding, increasing the
debt ceiling, and passing highway-funding legislation.

So, talk about corporate tax reform is not likely to
gain any immediate traction, and may remain just
that: talk.
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U.S. TRUST | THE MIDTERM ELECTIONS: TAX-PLANNING TAKEAWAYS

Some smaller tax matters may be addressed:

It seems all but certain that the nearly 50 expiring tax
provisions are likely to be extended (retroactively to
the beginning of 2014 and through the end of 2015)
and some possibly made permanent.

The Internet Tax Freedom Act, a moratorium on
internet taxes and the grandfathering for states that
already impose those taxes, should be extended as
well.
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U.S. TRUST | THE MIDTERM ELECTIONS: TAX-PLANNING TAKEAWAYS

And passage of the Achieving a Better Life
Experience (or ABLE) Act is likely. This would
allow individuals with a disability to accumulate and
grow assets, tax-free, for housing, transportation and
other disability expenses.

What about the Affordable Care Act? One provision
that could come under pressure is the repeal of the
2.3% medical device sales tax. Getting the votes for
repeal shouldn’t be a problem, but there is always a
risk of a presidential veto. So, expect nibbling around
the edges, but not a full scale dismantling of the
Affordable Care Act.

The Supreme Court will hear an important case next
March arguing whether the IRS overstepped its
authority with respect to subsidies for insurance
exchanges. The outcome may do significant damage
to the Affordable Care Act.
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U.S. TRUST | THE MIDTERM ELECTIONS: TAX-PLANNING TAKEAWAYS

A Republican majority in Congress may be able to
control the legislative agenda, but it doesn’t mean
they can pass bills, since they don’t have the 60 votes
necessary in the Senate to avoid a filibuster. And if
they do pass bills, the President always has a veto
power. The Republicans know this, and will likely
lead with legislation likely to pass, in order to prove
that they can govern.

As in the past several years, we expect the
president’s annual budget to call for changes
unfavorable to taxpayers with high incomes, but may
have little chance of passing.

So, what does this mean for individual taxpayers?
Perhaps not much, beyond some distracting noise
and major policy discussions that will not likely
result in substantive changes.

For more information, go to ustrust.com/taxes or
reach out to your advisor.

Thank you.
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U.S. TRUST | THE MIDTERM ELECTIONS: TAX-PLANNING TAKEAWAYS
IMPORTANT INFORMATION:
Opinions expressed herein are those of the featured
participant, U.S. Trust, and may differ from those of Bank
of America Corporation and its affiliates. The information
presented in this video is for discussion purposes only and
is not intended to serve as a recommendation or solicitation
for the purchase or sale of any type of security. This video
does not constitute investment advice and is issued without
regard to specific investment objectives or the financial
situation of any particular recipient.
Neither U.S. Trust nor any of its affiliates or advisors
provide legal, tax or accounting advice. You should consult
your legal and/or tax advisors before making any financial
decisions.
Investment products:
Are Not DIC Insured
Are Not Bank Guaranteed
May Lose Value
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U.S. TRUST | THE MIDTERM ELECTIONS: TAX-PLANNING TAKEAWAYS
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