Priscilla’s Newsletter: 3rd Quarter Update
July 2021
Priscilla’s Newsletter: 1st Quarter Update
January 2022

Priscilla’s Newsletter: 4th Quarter Update



Many of you reading this will not know the meaning of the campaign style button pictured here. Some of us are old enough to remember. This particular button was found at an estate sale in Castle Hills a few years ago. On October 8, 1974, President Gerald Ford introduced his WIN, or Whip Inflation Now, program encouraging Americans to do their part to help tame the high level of inflation the country was experiencing. Inflation once again is taking center stage as an investor concern, and rightfully so. The simplest definition of inflation is too many dollars, chasing too few goods. We are seeing that occur. Consumers flush with cash after more than a year of higher than average savings, are starting to make purchases they delayed during the uncertain times of the pandemic. At a time of thin inventories for many goods and products, there are lots of dollars chasing limited goods.

A few months ago, we were being told that the sudden price surges we were seeing across the economy were due to Covid related supply chain interruptions. The prevailing opinion was that the spike in prices would settle quickly once goods began to flow freely again. That process has been slower than originally anticipated. We have seen ships waiting for weeks to dock for unloading and once unloaded, goods are often sitting for weeks for transport due to labor shortages in the trucking industry. As manufacturing slowed (or sometimes stopped) due to lack of availability of components, we began to see inventories shrink but demand persisted. It is still the opinion of many economists that more normal conditions should return by mid to late 2022, with the U.S. Consumer Price Index beginning to gradually decline and eventually settling into a range of 2.5% to 2.75%. If that prediction holds true, we would anticipate the Federal Reserve delaying raising interest rates until late next year or early 2023. We would expect the Fed to gently pump the brakes on the economy by raising rates in increments over time rather than risk disrupting the COVID recovery with sudden or sharp increases. We will continue to monitor the inflation situation. We are not breaking out our WIN buttons quite yet and will let you know if that changes.


We recently held a webinar about what potential tax reform under the Biden administration could look like. Our featured speaker was Washington DC based tax attorney, Leslie Geller, with the Capital Group. Here is a summary of Leslie’s main points from the session:

Stepped-Up Cost Basis:

Proposed change: Stepped up cost basis upon death no longer applies and a taxable event occurs. As an example, if a family farm had appreciated in value and was worth $5 million more than was initially paid, heirs would be liable for paying taxes on $5 million worth of appreciation. This change could have serious tax implications for those inheriting family farms/ranches and mom and pop businesses.

More Likely to Occur: No changes to stepped-up cost basis. The proposal to create a taxable event at death is receiving large amounts of push back from both sides of the aisle, particularly from congressman in rural areas.

Estate Tax:

Currently, individuals can pass up to $11.7 million at death without paying estate taxes, which is already scheduled to drop to $6 million at the end of 2025 via the sunset provision within the Tax Cuts & Jobs Act. The proposals that are gaining the most traction would see an acceleration of the sunset provision as early as the end of 2022, bringing the estate tax exemption down to $6 million.

Capital Gains Tax:

Proposed change: This is one of the most talked about changes because of the large increase being proposed. The initial proposal is to raise the top capital gains tax from 20% to 40% for individuals who earn more than $1 Million in income per year. Doubling the previous capital gains tax would be drastic and is already receiving bipartisan resistance.

More likely to Occur: A smaller bump to the top capital gains rate for a larger portion of the population. Currently proposed is capital gains tax of between 23%-28% for individuals that make over $400,000 per year. In Leslie’s opinion, there is less than a 50% chance that the capital gains tax will be changed at all.

Corporate Tax Rates:

This is the most likely change coming in order to pay for the infrastructure and reconciliation packages currently up for debate. Prior to 2018 the corporate tax rate was 35%. Currently, it is 21%. This is important to understand because it shows what corporations have paid historically. President Biden’s current proposal is to increase the rate to 28%, however Senator Joe Manchin and other moderate Democrats are saying they want corporate tax rates capped at 25%. There has been mention of a Global Corporate Tax Rate. While this is interesting in theory, we have seen how difficult it is to enforce rules laid down by global organizations. This kind of global standard tax rate would be extremely difficult to implement or enforce.

Personal Tax Brackets:

President Biden stated throughout his campaign that there would not be any increase for those individuals making less than $400,000 per year. The Biden administration has a disconnect on who they want to raise taxes on and the actual economics behind it. While often stated that the wealthy are not paying their fair share of taxes, the data shows that America has one of the most successful progressive tax systems in the developed world – until you get to the ultra-wealthy, individuals with a net-worth of $100 Million and above.

Of the changes that are being proposed many will not even be up for a vote until 2022, and some will never happen. One thing not to be concerned about is a retroactive tax hike. There is no precedent for this historically, and there would be constitutional hurdles to any retroactive approach. What do we do from here? For now, we watch and wait. We never make planning decisions based on predictions. Going forward we will be having conversations with you about any tax changes, should they occur. Each one of our clients is unique, as are their financial goals. We do not let short-term uncertainty alter our long-term plans.


This is a question we have been asked often in the last year and the answer in a word is, good. BFA has managed to not only survive, but thrive during the COVID disruption. New clients continue to seek us out for financial planning, investment advice and management. We do not advertise, and we are grateful for your trust and support as you have continued to refer your friends and family to our office. Thank you. We appreciate you.

All the best,

— Priscilla "Cilla" McKinley

President - Brent Forrest & Associates LLC

*Brent Forrest & Associates, LLC may discuss and display, charts, graphs, formulas, and specific holdings which are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. These are offered with limited information and should not be used on their own to make investment decisions.