The White House is exploring ways to create incentives for US households to invest in the stock market. One proposal is that a portion of income for investment purposes would be tax-exempt.
According to CNBC, the Trump administration is currently examining several proposals as part of an upcoming stimulus package set to include tax-free investments outside of the 401(k) contributions common in America in the future. As part of an upcoming package of proposed tax cuts, the White House, according to sources, is also considering ways to encourage US households to invest in the stock market.
According to the director of the National Economic Council, Larry Kudlow, the proposal is intended to allow the general establishment of a savings account. This would treat a portion of household income tax-exempt for investments outside a traditional 401(k). This would allow savings for retirement, healthcare and education to be held in a single tax-advantaged account.
Financial resources could be invested at will as a capital gains tax would be eliminated
Taxpayers would be able to invest the funds as they wish via their savings account. Taxes on potential profits – usually referred to as capital gains – would be eliminated. A household with an annual income of $200,000 could contribute up to $16,000 with no tax implications. The money deposited into the account would be deposited on an after-tax basis and taxed on withdrawal.
The tax implications for bitcoin and crypto currencies would therefore be similar. If the funds remain invested within the savings account structure, digital currencies could be bought and sold without incurring tax liabilities. Such a new investment structure would provide a tax-exempt environment for investors interested in stocks, bonds or digital currencies. So far, owners of bitcoin have been confronted with tax liability issues.
Tax cuts require approval
The announced proposal will be received with great enthusiasm by most investors, although it should be noted that for the time being it will remain only a proposal. If tax cuts are planned, they must first be approved by the US House of Representatives, which would currently present a major task for the Trump administration.
Tax cuts or measures that have a direct impact on the economy are often proposed in election years and then rejected by the other side. The proposal that has now been submitted could therefore possibly meet the same fate. The number of investments in the stock market has risen to 55% of all US households during Trump’s term in office. This is the highest rate since the Great Depression.
* Originally published in German at CVJ.ch
