Low-income people will suffer. In this episode, I'm going to address
this topic: Tax Changes That Will Affect Everyone. Not just the rich. Get ready.
So, my name is Doug Andrew. And I've helped many, many people for 4 and a half decades optimize
their financial assets and minimize unnecessary taxes. I need to tell you I'm a red-blood
American. I think we should all pay our fair share of tax. But I've never met anybody in America,
republican or democrats, because this is not a political agenda on this video,
okay? That if they had the choice of redirecting otherwise payable tax to causes they support
that they wouldn't seize that opportunity. And so, let me share with you what I'm really
concerned about right now because a lot of people are feeling confused, isolated,
and powerless. When President Biden talks about raising taxes, he assures us it will not affect
the middle-income and low-income people. And I go, "What?" Because he's not going to come out right
on the surface and raise taxes maybe for those people but it ripples and affects those people.
So, let me share with you how and what you need to do to protect yourself because his proposals are
going to affect everyone and every single income category. You ready? So, as I teach you this, if
you gain insights that you didn't have before and you can think of somebody else you'd like to share
this with, be sure and do that or click comment or like. But subscribe because I post an in-depth
answer or a commentary on current events almost on a daily basis on this channel. Now, what are some
examples that President Biden wants to change with taxes. Let's go to the 401(k) proposal.
A lot of Americans try to save for retirement in a 401(k). And for years, they've been allowed
to put in pre-tax contributions. So, let's say a person earns $100,000 a year and they contribute
15% to a 401(k). That's 15,000. Up until now, you only have to report 85,000 of your 100,000
on your 1040 tax return, okay? You're contributing pre-tax money. Biden wants to do away with that.
You have to report the whole 100,000 of income on your 1040 tax return is what he has wanted to do.
And then he'll give you a tax credit. Now, he's thinking around 26% to start. 26% would help maybe
middle income and low-income people to get a tax break to use it traditional IRA or 401(k).
But for some of those who earn a little bit higher than middle-income and the higher-income earners,
he just took a bunch of money away from you. It was a tax increase by doing that. So, people say,
"Well, there you went and admitted that is not hurting the low-income people." Yes,
it is indirectly. Because what happens is a lot of those people are not going to even have a job to
contribute to a 401(k) because of what else he is doing. So, the corporate tax... And I have another
YouTube that explains the corporate tax that he wants to take from 21% up to 28%. What's that
going to do to corporations? A lot of times people say, "Well, they can afford it." No, they can't.
Do you know the average corporation in America only operates on about a 2 to 3 percent of profit
margin? On a million dollars of corporate profit, under Trump, they only had to pay 210,000 in tax.
Biden wants to raise it to 280,000. That is 33% more than 210,000. I'm here to tell you,
corporations can't do it. They're already planning based on that announcement from President Biden
on laying off people. We might see a million to 2 million jobs go right out the window within
30 days as corporations have to tighten their belts and they have to put off expanding. So,
all of a sudden the construction crew and the architects and everybody that was going to help
the plant expand, they're all laid off because he is raising corporate taxes. And so, the people
that he says he doesn't want to hurt are the ones that are getting hurt because they're losing their
jobs. And the corporations are going, "Okay, we're going to have to switch to automation. We can't
use humans anymore." This is going to happen. So, that's the corporate. It's a ripple effect.
Now, he has proposed raising the minimum wage to $15 an hour. Sounds pretty good, right?
Let's rethink our thinking. You ready? So, $15 an hour, a minimum wage sounds good especially
for people that live in San Francisco or New York where the cost of living is through the roof. And
so, yeah. That might be a good minimum wage in San Francisco. But in the mid-west where the cost of
living is half or a third of what it is in San Francisco, you have an employer who's let's say
employing 10 people at $10 an hour. Just to be simple. So, he has $100 an hour in his budget,
this business owner to pay 10 employees. And all of a sudden, there's a $15 an hour minimum wage
across the board in the country. And so, he has to pay $15. He doesn't have 150. He only has 100. So,
he's going to lay off what? 3 people. And he still has to tighten belt because he has only
7 employees now paying $15 an hour which is 105. And his budget was 100. This is why the
congressional budget office says that when the minimum wage if it gets passed across the county
right off the bat, about 1.4 million jobs will be down the drain, gone. And so, if the companies
were expected to "Oh, come on! Keep the employees. Raise your prices on what you are selling."
Okay... Well, hopefully, they can stay in business. But if they raise the
prices of their goods and services, all of a sudden the employee that gets $15 an hour
didn't really see an increase in their standard of living. Because now $15 when gas has doubled,
food has doubled; $15 dollars doesn't even buy what $10 used to 4 years ago. It's hurting the
very people that he's proposing to help. But it sounds good and they'll get votes if they do this.
I just get so concerned because sometimes they don't understand the very people they're touting
that they're going to help. It ends up hurting. So, that's why raising the minimum wage to $15
an hour is myopic. It's short-sighted. They're not looking down the road. What else should we
be concerned about? Now, on this channel, I have a lot of YouTubes that talk about
the changes that Biden is proposing for capital gain taxes. There's a lot of people that own a
highly-appreciated assets that they purchased years ago --stocks, bonds, golds, silver. I
don't care. But it's usually real estate property, okay? Rental homes or duplexes or what have you.
And they buy these properties and over time, they may double in value every 15 years or so just a 5%
annual appreciation rate. It's very common. I meet people all the time who bought a rental property
for 250,00 and 30 years later, it's worth a million bucks. Sometimes, it's way more than that
in California. Well, when they sell that, that's a capital gain. And under Donald Trump for example,
under his administration, you would pay 20% tax. Now, I sold a commercial building about a year and
a half ago. And that capital gain is added to your ordinary income to calculate the tax rate. So, I
jumped right to the 20% rate. Biden wants to raise that to ordinary-income rate. I can assure you.
If you inherit a piece of property or you sell a highly-appreciated asset and you
have to pay a capital gain, that's going to force you to the 39.6% rate most likely. So,
that's just about double. So, he's going to double the capital gain tax and then he also wants to do
a way with what is called the step-up in basis on long-term capital gains so that if you thought you
could hold on to that and leave it behind to your children and they would avoid paying the capital
gain because they get a step-up in the basis. They only have to pay tax on what they sell it for over
and above what it is worth when they inherited it when you died and left it behind to them. Now,
President Biden wants to have people who inherit children who inherit from their folks have to pay
a capital gain on the entire gain from what the parents paid for it day one. This is huge. Some
people have not calculated this. This could be the difference of paying 20,000 in tax under the old
law to over 400,000 in tax if they do a way with step-up in basis. And a rental home went up in
value from 250,000 to a million dollars. If this is intriguing you, be sure and watch the video on
capital gain taxes that I have on this channel. So, what's the long and short of all of this?
We are here in this situation because of the stimulus packages that have been passed primarily
at the recording of this video. There was a lot of stimulus spending because of covid 19, okay? And
I'm not going to argue pro or con but basically, during the covid 19, the federal government had a
budget of about 5 trillion dollars. That's how much the IRS collects in taxes. Now, ofttimes,
the government spends more than they bring in. I don't know how they keep doing that. They keep
going deeper in debt. I mean, if I with my wife kept spending $200,000 and we only made 100,000,
how long can we do that? No. But the government seems to be doing that. So, what's been happening
is they've already gone through about 5 trillion more than the 5 trillion that they bring in.
So, they've spent about 10 trillion and they only bring in 5 trillion, okay? They've spent
twice what they bring in just with the stimulus packages. Now, they're talking about additional
proposals, infrastructure of 2 trillion. And from what I hear, less than 10% of that is really going
to freeways and bridges and roads. Only 10% is going to infrastructure. The rest of it is
all kinds of other stuff. The point is they can say, "Look how wonderful this is going to be."
But Janet Yellen who is the secretary of the treasury says, "You know what? Congress, if
you pass this, you've got to at least come up with half of it with new tax revenue by raising taxes."
And that's why Biden has all these taxes increases up his sleeve. The problem is you cannot raise
taxes just on the wealthy or on corporations or on capital gains without it rippling down and hurting
everybody. And people say, "Well, he didn't raise taxes on the low income. No, but he created the
situation where they no longer have a job. What would they rather do? Pay a little bit more in
tax or just be unemployed. See, this is serious stuff that causes recessions and unemployment. So,
these are tax changes that will absolutely affect everyone. If you want to make yourself immune
from taxes going up, inflation eroding away your purchasing power. And the market volatility
that happens because of these recessions, let me show you what you can do to learn
to protect yourself from the negative impact of taxes, inflation, and market volatility.
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