Now that President Clinton's tax and budget proposals have been enacted, some advisers see a danger that many Americans with money to manage will overreact.
Despite perceptions of widespread tax increases that show up in public opinion polls, these analysts point out that income tax rates aren't going to change for the vast majority of individuals and families.So the relative appeal of the various types of savings and investment vehicles based on their tax status isn't likely to change much either.
Even for those who are facing some tax changes, such as higher-income Social Security recipients, most experts caution against hasty action.
"Some people have whipped themselves into a frenzy. But there are few people relatively that are affected," says William Brennan, a specialist in tax and financial planning matters at the accounting firm of Ernst & Young.
"The impact is primarily on high earners," Brennan adds. "In the middle to low-income areas, there's no reason for concern."
The only direct change in tax rates, raising the rates on the next dollar of income above the present top rate of 31 percent, doesn't begin to apply until taxable income surpasses $115,000 for single filers and $140,000 for married couples who file joint returns. That excludes about 98.5 percent of all taxpayers.
For Social Security recipients, the amount of benefits subject to income tax rises from 50 percent to 85 percent for individuals with incomes of $34,000 or more, and couples at $44,000 and above. That excludes 87 percent of all recipients.
For those whose taxable benefits do increase (starting in 1994), analysts caution against rushing to buy municipal bonds, because income from that source is counted in determining how Social Security benefits can be taxed.
"Switching to tax-exempts won't help you," Brennan observes.
Even before the Clinton plan became law, discussions of it helped touch off a surge of interest in municipal bonds, muni bond funds and other related investment products.
"Perhaps this is a good time to bring up tax-free income," one major fund sponsor declared in advertisements that appeared just after Congress passed the new law.
Many people might like the returns they can get from municipals right now. But unless they are at the very top of the income scale, the Clinton plan contains no new incentives for them to buy tax-exempts.
As for trying to sort out the effects of the package on the economy or the financial markets, many analysts take a similarly cautious view.
Though it has received a lot of attention, they say, the current legislation is far less sweeping than other bills of recent years, such as the tax reform laws of 1981 and 1986.
"We doubt that congressional action on the Clinton deficit-reduction package will have a major effect on financial markets one way or the other," says Standard & Poor's Corp. in its advisory publication The Outlook.
"The economy should continue to grow at a moderate pace."
Passage of the bill, by razor-thin margins in both houses of Congress, at least cleared up a major political uncertainty facing investors, consumers and business planners.
But given the prospect of matters such as health-care reform, new questions loom to replace any that have been answered.
Said David Resler, chief economist at Nomura Securities International: "Resolution of the uncertainty surrounding the exact composition of the budget compromise will probably be replaced by uncertainty about the long-run results."