They need trillions of dollars to pay for initiatives like health care and free college
tuition. In this episode, I'm going to address the Biden tax plan and how capital gain taxes will be
doubling and why. So, I'm Doug Andrew and I'm a financial strategist and I've helped many,
many people in America accumulate their money on a tax-favored basis. And more importantly,
not outlive their money in retirement by using strategies that are protected
in the internal revenue code that allow you to accumulate your money tax-free.
And then be able to access the money tax-free. And when you die, it transfers income tax-free.
And it's far better than traditional IRAs and 401(k)s. So, I've always got my ear to the ground
so to speak when there are tax law changes. And we see them every time congress changes hands.
So, this video is not a political agenda, okay? What I want you to understand when people ask me
questions, "Golly..." Okay, President Joe Biden is now elected. And based upon what he ran on in his
campaigning and what he's already said he's going to do what his goals are, I want to share with
you some of the repercussions that will happen because of that. And it has nothing to do with,
"Oh, golly, I agree or disagree. Or how stupid" Or whatever. I'm just going to tell you the facts of
what happens economically based upon certain tax policy. Does that sound fair? So, as we go through
this, I want you to understand that president Biden got elected by a lot of people in the
electorate that sort of thought, "Oh, wow. That sounds good. I would like to have my student loan
debt forgiven." I'm all for free college tuition. Well, wouldn't you be if you were that age?
Or how about people who can't afford health insurance. If you hear, "National health care,
medicare for all". Yeah, that sounds pretty good. Well, those things cost money. How much money?
Well, according to the congressional budget office or the general accountability office,
they have conservatively estimated that each of those 2 initiatives will cost
north of 100 trillion dollars in the next 10 years. Let's just take one of them. Medicare
for all. And if that's going to cost 100 trillion, you divide that by 10 years and that's an extra
10 trillion a year the government needs to collect in tax. How much do they collect in tax right now?
About 5 trillion and they spend it all. So, that means they're going to need 15 trillion,
okay? 3 times as much money and keep to their current budget just to afford medicare for all.
Same thing for free college tuition. The money has got to come from somewhere, right? Okay.
So, if we really want that, if it sounds good, the money has got to come from somewhere. And so,
it's usually rising taxes, okay? That will affect America and then it's also printing of money
which causes inflation. So, the 2 big dangers are rising taxes and inflation. So, I've helped many,
many people to protect their hard-earned savings during their golden years from being eroded away
because of those 2 dangers. And so, my purpose in this video is to help you understand that
whenever we have government that is looking for tax revenue, oft times, they just want to cut
to the chase and raise taxes. And so, one of the biggest proposals that president Biden outlined in
his campaign is he wants to take capital gain tax back up to ordinary income tax rates. So,
let me share with you what the capital gain tax is simply and why he thinks we ought to double it.
And what you can do. But there's something even more dangerous he wants to do away with a step-up
in basis. So, what's that? The capital gains tax rate... And we're talking about long-term capital
gains. This is any asset that you have owned for a year or more and you sell it for a profit,
okay? So, before I answer this question if this is already intriguing you and you know somebody
who ought to be watching this, share, comment, click like. Subscribe to this channel. It's
free and be sure and click the bell and you'll be notified every time I post an answer to a
question like this that can save you or someone you know a ton of money of unnecessary tax.
So, the capital gain tax. Depending upon who is usually in the executive branch and or congress,
this keeps changing. I've always felt that the capital gain tax is a little bit unfair.
So, it wouldn't matter if your parents let's say bought some stock years ago in Apple or whatever
and now that stock is worth a ton of money and. And you inherit it. Now, you would have to pay a
capital gain on that based upon how much money was made from the basis, what your parents paid for
that stock and what they're selling it for. If you did not get a step-up in basis. And I'll explain
what that really is here in just a second. But that is the capital gain. Now, it could be stocks,
it could be even gold and silver. A lot of people inherit real estate. So, let's say you buy rental
property or your parents bought rental property 30 years ago, a rental home for $100,000. And that
rental home appreciated at (let's say) 5% a year, even 7% a year. It will double every 10 years. So,
I've seen many, many people who the parents bought the duplex and they have been renting it out
for 100,000 and it doubles to 200,000 in 10 years or 15 years. And then 200,0000 doubles to 400,000.
And maybe even goes up to 5 or 6 hundred thousand and then they die. What did they do in that
situation, they depreciated down the actual building down to just the value of the land.
And so, their basis on the building is now zero because you got that tax write-off. But they
held on to it because if they sold it, they would have to pay a capital gain tax.
Now, capital gain tax rates, when you think about it, they're taxing you for inflation. A lot of the
appreciation is just because the apartment went up in value because the cost of living just went
up. It was just inflation. So, I've never liked capital gain taxes because you're getting taxed
for inflation. But if you haven't noticed government likes to tax people when they are
getting money from the sell of something because it's an easy time to just tax somebody. So, that's
called the capital gain tax. And so, many times they will give you a lower tax rate. So, under
the Trump years, the long-term capital gain rates or they were either zero if you had low income or
15% no more than 20%. Now, Obama, he tacked on a 3.8 surtax on capital gains to fund Obamacare.
So, this is where they like to come up with extra money for health care even like Obamacare.
So, that is called the capital gains rate. The highest it was 20% under the trump tax plan. Biden
wants to take it up to ordinary income rates which means any capital gain you get is added on top
of your earned income. And so, I sold a building and during the trump tax years, I had to pay the
capital gain but fortunately, it was only 20%. But it took me up to the highest income rate.
So, I had to pay 20 plus 3.8. Under Biden's proposal, I would have paid 39.6%
plus 3.8. I would have paid double. This is what Joe Biden wants to do on capital gains
because it's an opportune time to get tax revenue when people are selling property.
People usually would put that off by either buying like property under what is called a 1031
exchange. You buy a like property but you're just inheriting a new headache. You're going from the
frying pan to the fire. But people do it thinking they're saving tax. No. You're just continuing
to postpone and put it off. But when you ultimately die, why do they do that?
Because under previous law, if you were inheriting a duplex from your folks that they
have taken the basis down to next to nothing and now it's worth 600,000 or 800,000 dollars,
you would have to pay a capital gain on that whole amount unless you got a step-up in basis.
That means if your parents die and leave it to you in your inheritance, you only have to pay a
capital gain tax on what you sell it for over and above what it was worth when you inherited it. So,
your basis goes from next to nothing up to 100,000 or 800,000. You only have to pay tax on
what you sell for over and above that. President Biden wants to get rid of the step-up in basis.
This is huge. That means that if you inherit highly appreciated stocks bonds, whatever,
real estate, you will have to be paying tax at double up to 40% and you'll likely be in that
bracket if you inherit an asset like that. And you will have to pay it on the entire amount. This is
huge. So, what should you be doing if you may inherit or you're thinking you're going
to continue to postpone. And your kids get a step up in basis. Here's what I would recommend.
So, before I share with you what I think you ought to do, keep in mind I'm talking about the capital
gains tax. President Biden also wants to increase the income tax rate so that could also affect
this if your capital gains rate is the same as ordinary income tax rates and those go up,
okay? We're also talking about the federal government has wanted to force
fiduciaries of people's money that are in IRAs of 401(k)s to protect Americans from losing money in
the market. They've been talking about forcing fiduciaries to require that people that have
IRAs or 401(k)s must put a certain percent, maybe 10, 20, 30 percent in U.S treasuries.
You know how much money is in Americans' IRAs and 401(k)s? It's approaching 25 trillion.
If they were successful in moving 30% of all money and IRAs a 401(k)s over to U.S
treasuries, they want to guarantee 3%. That's not what they're paying right now.
But see, the government is trying every way they can to get money because of these initiatives.
So, if it's a capital gain tax and you think you're going to save, I would recommend that
if you've got highly appreciated assets and you're tired of being a landlord or whatever,
you may want to sell sooner than later. Pay the capital gain at today's lower rates and then
reposition the after-tax money into something that's going to be tax-free from now on. And
you'll come out way ahead rather than waiting and waiting to see if they do it because many times,
people think, "Oh, they'll put it into effect next year", right? Now, you wouldn't believe
how many times they make it retroactive back to the beginning of the current year. So,
I would recommend if you have highly appreciated assets and you're thinking about selling and you
have the opportunity in a hot market, go ahead, bite the bullet. Pay the tax
at today's lower capital gain rates but what do you do with the money? People are shocked when
I show them how to reposition that money into my favorite vehicle which I call the Laser Fund. And
then when they see that the income coming out of the laser fund tax-free at a payout of 7,
8, 9, 10 percent equals or exceeds the rental income especially after tax from the properties,
they're like, "Whoa! Where have you been? I didn't know this existed." Yeah, you can't be aware of
something you're not aware of. And so, this means you don't have to be a landlord anymore if you're
tired of taking out the trash, fixing toilets, evicting tenants. Hello? You don't have to have
something management-intensive you can go do all kinds of activities in your golden years
and your money predictably generates that kind of cash flow because the Laser Fund is tax-free. It
doesn't matter what taxes go to because it's not subject to tax. It hasn't been for over 100 years.
Inflation, your money is linked to inflation. So, inflation will help you instead of hinder you.
But your money's not invested in the market. So, when the market crashes, you don't lose. But it's
linked to whatever the market does so that when the market goes up, you benefit. When the market
goes down, you don't lose. People say, "Huh? How does that work?" Well, here's how you can learn
how it works so you don't miss out. If you like to learn and take ownership of your brighter future,
you're going to love reading and studying my 11th book. It's called The LASER fund.
LASER is an acronym that stands for liquid assets safely earning returns. It's my favorite vehicle.
And this is what I've used for over 4 and a half decades. People reposition money in here from
assets that they've sold and paid the capital gain tax. They've repositioned and strategically rolled
money out of IRAs and 401(k)s into these. They take non-performing assets in banks and credit
unions earning less than 1%. Why? Because of these 4 pillars. They want to increase the liquidity,
the safety of their money, the rate of return and they want it to be tax-free to where every million
can generate 60, 70, 80, 100 thousand a year of tax-free income. And if you live to be 120,
you won't outlive your money. But when you ultimately die, it transfers to your family
tax-free. So, this is how to diversify and create the foundation for a tax-free retirement. If you
would like a free copy, I'd love to gift you one. I'll pay for the book, okay? You simply
go to laserfund.com or click on the link below and you contribute a nominal amount towards the
shipping and handling and I'll cover the rest and I'll fire out a copy of this 300-page book to you.
And you can learn, read, study. You flip the book over and read about 62 stories on this
side of the book. And you will begin to understand how you can avoid taxes on your hard-earned
money as you enter the golden years and not be penalized and have to outlive your money because
of the negative impact of taxes, and inflation, and market volatility on your serious money.