2022 Washington Outlook for Investors

Today we face challenges with rising inflation, the COVID-19 pandemic, and increasingly dramatic actions by the Fed. Set to drive significant repercussions for investors, with shifts in inflation, in interest rates as the Fed responds to those interest rates, and with unpredictable markets as physical goods and services sales respond to the impact of the pandemic and global supply disruptions.

In the Capitol, there’s some easing up on the fiscal side, as expected impacts from the Build Back Better Act won’t be going through as planned. That all means a significantly different 2022 than most would have predicted using data from just a few months ago – for a vastly different investing environment.

As with any year, it’s important to consider how politics are impacting potential policy and the associated investment implications. Reviewing these potential changes and taking time to consider their impacts are important.

Build Back Better Act

The Build Back Better Act, which was set to be signed into law with tax impacts coming into play on January 1^st stalled and then collapsed in Senate. While much of the bill could be reformed and moved through anyway in more piecemeal form, the House-passed bill will not be moving through in its current shape – as discussions never even got off the ground. Rather, Senator Joe Manchin stopped it cold with objections, as the democrats need full democratic approval to pass the bill in a 50/50 House of Representatives environment.

That also means the tax provisions, which were set to impact investors significantly, have been put on hold.

Tax Outlook

For example, the pending ban on mega backdoor Roth conversions has not gone through. The proposed 1% surcharge on corporate stock buybacks also won’t go through. Other, significant changes, like the 15% minimum tax on foreign corporate profits, 15% corporate tax minimum, closing Medicare tax loopholes, and other restrictions to business losses and tax defaults are not going through. However, for savers, the proposed changes, specifically the mega backdoor Roth conversion are the most impactful.

While those changes might still happen, they are currently in limbo until the bill is scaled down and rebranded to continue negotiations.

Midterm Elections

2022 is also a mid-term election year. For investors, that means more stability, as neither party is willing to give the other leverage to oust them in November. That doesn’t mean 2022 will be a stable year, however.

So, with slower economic growth, higher inflation, and increased volatility, this is not an easy year for investors.

If you need help navigating the financial environment of 2022, the experts at Tangent Retirement can help. Our team offers more than 20 years of experience navigating financial and investment markets, giving us the expertise to help you build and grow your portfolio, even around the volatile markets of 2022.