The upcoming U.S. election has heightened uncertainty for high‑net‑worth investors and entrepreneurs. Many are now looking at “plan B” options—second passports, alternative residences, and tax‑efficient structures—to protect assets regardless of which candidate wins.
Why political outcomes matter for wealth planning
- Policy volatility – Recent elections (e.g., Brexit, the 2016 U.S. presidential race) have shown that political shifts can trigger rapid spikes in demand for alternative citizenships and tax‑friendly jurisdictions.
- Tax‑policy rhetoric – Both major U.S. parties have floated higher taxes on the wealthy, wealth‑tax proposals, and stricter inheritance rules. Even if a candidate’s platform aligns with your preferences, the broader political climate may still lead to tighter fiscal policies.
Federal and state tax realities
- Federal income tax – The top marginal rate remains 37 % after the 2017 Tax Cuts and Jobs Act lowered it from 39.6 %. This headline rate applies regardless of the election outcome.
- State taxes – High‑tax states such as New York, California, Washington, Maryland, and Massachusetts continue to levy substantial rates. Relocating to a low‑tax state (e.g., Texas) can reduce state liability, but it does not affect the federal rate.
- Deduction limits – Under a potential Trump administration, state and local tax (SALT) deductions could become harder to claim, increasing the effective tax burden for residents of high‑tax states.
Ongoing U.S. reporting obligations
- Foreign assets – U.S. citizens, even those living abroad, must file FBAR (FinCEN Form 114) for foreign bank accounts exceeding $10,000 and Form 5471 for ownership in foreign corporations.
- Foreign trusts – Establishing a foreign trust to shield assets still requires extensive reporting and does not eliminate U.S. tax liability.
Relocation and alternative jurisdictions
- Living abroad – Moving overseas can lower living costs and provide access to more favorable tax regimes, but U.S. citizens remain subject to worldwide income tax and the reporting requirements above.
- Puerto Rico – The island offers tax incentives for bona‑fide residents, yet it is still subject to U.S. federal law and may not suit everyone’s lifestyle preferences.
The case for a “plan B” independent of election results
- Second citizenship as insurance – Obtaining an additional passport provides a safety net if future policies restrict travel, impose wealth taxes, or otherwise limit personal freedom.
- Timing matters – Waiting until after an election to secure a second passport can be risky; market demand for fast‑track citizenships often spikes around political events, leading to longer processing times and higher costs.
- Real‑world example – One client delayed acquiring a second passport, assuming the political climate would remain stable. When the window closed, he incurred over $500 k in lost opportunities because he could not react quickly enough.
Practical steps for high‑net‑worth individuals
- Assess worst‑case scenarios – Consider the possibility of increased taxes, asset freezes, or restrictions on property ownership.
- Identify low‑tax jurisdictions – Research countries offering citizenship‑by‑investment programs, favorable tax treaties, and stable legal systems.
- Diversify residency – If you currently reside in a high‑tax state, evaluate relocation to a lower‑tax state or an overseas location that aligns with your lifestyle and business needs.
- Maintain compliance – Keep all U.S. tax filings up to date; non‑compliance can trigger penalties that outweigh any perceived tax savings from relocation.
Bottom line
Election outcomes alone should not dictate wealth‑preservation strategies. The United States’ federal tax rate, state tax burdens, and reporting obligations are likely to persist regardless of who wins. Building a robust “plan B”—including second citizenship, strategic relocation, and diligent compliance—provides continuous protection against political and fiscal uncertainty. Acting proactively, rather than reacting after an election, reduces the risk of costly delays and ensures greater flexibility for the future.
