Family Office Monthly More broadly, if the President and his Democratic colleagues in Congress succeed in raising taxes on the wealthy, one likely source of revenue would come from increased capital gains taxes. Democrats have long argued that capital gains, which are taxed at a much lower rate than ordinary income due to the risk involved in investing, unfairly favor the wealthy. Many readers will recall that the day after the election, the stock market took a dive; Wharton finance professor Jeremy Siegel explained the event as a direct result of investors fearing that capital gains would be taxed more heavily in Obama’s second term, sparking a sell-off. Professor Siegel told CNBC, “I think a lot of people with capital gains have been locked in saying ‘I’m going to take them under 15 percent instead of 23.8 percent.’”1 If the markets are correct and capital gains are taxed higher, the effect on family offices and their clients will be dramatic and—as shown by the recent selloff—immediate. Taxes, Taxes, Taxes: Perhaps most disconcerting to high net worth individuals is the prospect of increasing income taxes over the next four years. With the Bush-era tax cuts set to expire at the end of this year, President Obama is pushing hard to renew only the Middle Class tax cuts, allowing the tax breaks on higher income taxpayers to reset to higher rates.

After resisting any legislation that included increasing revenue, Republicans now appear ready to include some form of revenue which would suggest that high income individuals will end up paying more in some ways. Michael Schroeder, CEO of Wasmer, Schroeder & Company—an RIA whose clients include HNW individuals and family offices— explains the situation, “whether in the form of higher tax rates or by means of limiting deductions, those with high incomes are very likely looking at paying more federal and, in some states like California and Minnesota, state income taxes after January 1st, 2013.” As wealthy individuals and families look toward the future it increasingly becomes not a question of whether they will have to pay more next year, it is now only a question of how much. To discuss the ideas in this edition or any other challenges you are facing, call me at (503) 922-1811. Your friend in the family office space, Richard C. Wilson President/Founder Family Offices Group (G.T.C.

Institute, LLC) 3300 NW 185th Avenue Suite #108 Portland, Oregon 97229 Direct: (503) 922-1811 Fax: (480) 772-4041 Email: Richard@FamilyOfficesGroup.com Website: www.FamilyOfficesGroup.com About Richard C. Wilson & the Family Offices Group Richard C. Wilson works with family offices and ultra-wealthy families daily, and is author of "The Family Office Book: Investing Capital for the Ultra-Affluent." Disclaimer: The following is for informational purposely only and does not represent financial advice, wealth management recommendations, or a solicitation for the sales of securities.

Richard C. Wilson (Series 7 & 63) and Richard Wilson Capital Partners, LLC is associated with RiverRock Securities, Inc. and FINRA and SIPC registered Broker/Dealer in the United States. 1 Menza, Justin.

“Capital Gains Tax Fears Behind Stock Selloff: Siegel.” CNBC. Wed. 19 Nov.

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