The insurance industry could be positively affected by the latest election if Congress fails to act on the tax-cuts sunsetting on 12/31. At least, that’s the opinion of Toronto-based BMO Financial Group in a conference call this week, exploring the financial implications of the political events on Tuesday, Nov. 7th.
Andrew Busch, a Chicago-based global currency and public policy strategist at BMO Capital Markets state, “Tax avoidance will return as an investment strategy, with less productive uses of capital. When you tell upper income earners that you’re going to raise their taxes to 39.6% from 35% and raise taxes on capital formation and investment, then people will adopt strategies to avoid paying taxes.”
Chief investment officer of BMO Private Bank, Jack Ablin, agreed with that viewpoint, and said, “To the extent that life insurance plays a critical role in tax avoidance strategies for estate tax and other tax-related issues, [President’s Obama’s victory] could present a much bigger opportunity and expanding role of life insurance. it would seem life insurance would be favorably impacted by the election results.”