COULD THE PROPOSED WEALTH TAX PLAN CAUSE MORE DIVORCES?
There are many reasons to marry; however, there are also many reasons to divorce. Filing for divorce can be a complex decision, and many couples in Connecticut and elsewhere do not fully appreciate how this process will impact them. While dissolution can be the best thing for a couple, some couples may divorce for the wrong reasons.
Could the proposed wealth tax plan cause more divorces? With the Democratic presidential candidates proposing various changes for our nation, this is one proposed change that has many questioning whether they would fare better if they were single. In other words, the wealth tax plan has some wealthy couples questioning if a divorce would make sense in order to save money.
The proposed plan will not distinguish between individuals who are married or single; a 2% tax will be imposed on those whose wealth exceeds $50 million, while those whose wealth is over $1 billion will be taxed at a rate of 3%. This means, in theory, a couple that is worth $100 million could divorce and split their wealth to avoid the tax that would be imposed on them. They would be able to save $1 million by getting a divorce.
Because this divorce incentive is apparent, it is suggested that the threshold or bracket for singles be less than couples. This would remove the incentive to divorce because the tax for couples would begin at $50 million and $25 million for singles. While there is a concern that such a policy could push some to divorce, the reality is that divorce occurs for many reasons, and in a high-asset divorce, there are likely a wide range of divorce issues to address.
No matter the cause of a divorce, it is vital that spouses fully understand the process and how it will impact them. Divorcing can be a major, life-changing decision; thus, those going through the process should be well-informed. Those unsure about the process should take the time to understand their rights and options when it comes to filing for divorce and moving forward.