Tax revenuers want to redistribute up to 70 of your hard-earned wealth. In this episode,
I'm going to address Biden's tax proposals -protect your wealth now.
Hi, I'm Doug Andrew. I've been a financial strategist and retirement planning specialist
for more than 4 and a half decades. And so, I've helped many thousands of people optimize their
financial assets minimize taxes and empower what I call their authentic wealth. So, in this episode,
I'm very passionate about helping protect you from unnecessary tax. Now, I'm a red-blooded American.
I think we should all pay our fair share of tax. But I've never met anyone of any political
affiliation that given the choice would not rather redirect otherwise payable taxes to causes
that they support. So, I have a lot of YouTubes on this channel that talk about this very topic.
But right now, I want to talk about some of Biden's tax proposals that will likely pass
Congress because Congress is right now in his favor with the house and also even the senate
being any Thai votes going to Vice President Harris. So, let's review some of these tax
proposals and why a lot of what tax revenuers propose to do is to tax money as it transfers.
Especially upon seller property or upon death or even on income. So, there's 3 types of taxes
that President Biden is going after to increase in order to raise tax revenue in order to cover
a lot of the expenditures, the programs, the initiatives that he ran on. We're going to
talk about income tax, capital gain tax, and inheritance tax or what is sometimes called
as the estate tax. So, as we go through these, these may affect you to one degree or another
but beware. You could end up giving up to 70% of your hard-earned wealth to taxes as you earn
it as you sell and convert it and as you transfer it upon death. So, let's go through these one by
one and see how they may affect you and what you can do to avoid paying unnecessary tax.
So, President Biden has a lot of initiatives that he needs to fund. Be it
health care for a lot of the immigrants that he is bringing into America. He has a lot of
other initiatives that's going to require a ton of tax revenue. Now, generally speaking,
you can raise tax revenue by raising taxes or by raising the revenue that's being taxed.
And I have another episode that talks about those 2 differences. But here let's just talk
about the three types of tax that he's going to likely be increasing quite dramatically.
Now, the first tax that most people are aware of is income tax. This is where we get taxed
on our money as we earn it. And you only have to pay tax on income if it's earned income, passive
income, or portfolio income. Now, earned income is salaries and wages and so forth which you do
by going out and earning money. Passive income would be income that you get from maybe rents or
leases on equipment or apartment buildings or what have you. Portfolio income is usually interest and
dividends on investments. Those are the only 3 types of income that Americans pay income tax on
since 1986 tax reform. So, if you have income that is not under one of those 3 umbrellas,
you don't have to pay tax. It's not a loophole and that's where I choose to put my serious cash.
I'll get to that at the end of this episode. So, stay with me. If what I've already said
intrigues you and you know somebody who ought to be watching this, be sure and share. Click like,
subscribe. And I post an in-depth answer to a financial question almost daily on this
channel because I'm passionate about empowering you with education. Income tax is what we pay
usually annually on our increase, what we earn. Or the passive income or the portfolio income. During
the Trump era, he lowered income tax rates. He took what used to be the 28%
bracket which was for married couples making about 70,000 at the turn of the century. And because of
9/11 (the terrorist attacks) George Bush who was republican, he believes more in raising
the revenue that's being taxed. So, he lowered taxes. He lowered that 28% bracket down to 25%.
Now, Hillary, had she been elected in 2016, she was going to raise that back up to 28% again.
Instead, Trump did the opposite. He lowered that down to 22%. And he introduced a new 24% bracket.
This is what stimulated the economy and it began to boom because he believes as Bush did in raising
the revenue that is being taxed which actually increases tax revenue.
What Joe Biden wants to do is get the money as quick as possible by simply raising taxes. He
doesn't want to hurt middle-income Americans but it's going to affect them indirectly one way or
another. He definitely wants to take the highest income earners. This would be couples making over
400,000. Single taxpayers making over 200,000 and raise them up from 37% in federal tax to 39.6%.
And I think it's going to be even a little bit higher than that. But it's going to affect people
all the way down to middle-income earners. One of the big initiatives that Joe Biden has is to stop
allowing pre-tax contributions to 401(k)s. Now, he doesn't want to discourage people's saving in
401(k)s. But you know, the original champions of the 401(k) lament the day they ever came up with
that idea. Got away from them. Because a lot of people lose money in the market in 401(k)s.
And that's why they go, "Wow, this has gotten bigger than anything we ever thought it was
going to be." It was going to be a supplement. And instead, a lot of employers said, "No,
you can participate in a 401(k). We might allow you to put in up to 60% of your income and we'll
match 50 cents on the dollar or whatever." And so, 401(k)s became the predominant way that people
save for retirement. But many Americans lose money in the market. It's a defined contribution. You
define how much you're going to put into a 401(k) whereas up until then most people had
to find benefit plans, pensions. If you're a school teacher, a police officer, a fireman
you get a defined benefit. Well, employers didn't want to be responsible for managing pension funds
and having to make sure that they could guarantee that. And so, they just said, "You know what?
You can define your contribution and you choose where that money's invested." And if you make
money or lose money, that's your problem. And so, 401(k)s became much bigger than the original
champions of the 401(k) ever intended. And that's why in 2017, they said, "Yeah,
we lament the day we ever came up with that idea." In fact, Time Magazine years ago had a cover story
that said, "Why it's time to retire the 401(k) and do something better instead." What President Biden
wants to do is have everybody report their full income. Let's say you made $100,000.
And if you put 15,000 into a 401(k), you only have to report 85,000 on your tax return.
He wants you to report the entire 100,000 and then he'll give you some credits if you put money into
a 401(k). It may not be what your tax bracket was but it will be a credit maybe around 26%.
Who does that hurt? The middle-income earners on up. And so, if you earn the average that an
American makes or a little bit more, you will be paying more in income tax. And your bracket may
go from a 22 to a 25-percent or what have you. The other kinds of taxes are capital gain and
inheritance taxes. And this is where money that we accumulate that we work hard for that we intend on
leaving behind to our children grandchildren our families. This is where a lot of tax revenuers
love to tax that money as it transfers. Because they're actually taxing people that are six
feet under. So, let me explain these in a little bit more detail. The capital gains
tax is usually assessed when you experience a gain upon the sell of a highly appreciated asset.
It could be stocks, it could be gold or silver. A lot of people buy real estate.
And over the years, that real estate appreciates in value. So, the example I like to give is that
if your parents bought a rental property for 250,000 30 years ago and if it appreciated it 5%
a year, it would double in value about every 15 years from 250,000 to 500,000.
Another 15 years, it doubles to a million. So, there's a lot of people that had a rental home,
they bought for a quarter of a million that's now worth a million dollars 30 years later.
Well, they want to avoid paying capital gain tax on that. And I've always thought capital gain tax
was a little bit unfair because you're being taxed in large part on inflation. A lot of that
appreciation was just the cost of living going up. And so, that's why a lot of Republicans feel like,
"Well, you want to have a lower tax on capital gains." And that's why Trump had the capital
gains rate start out at zero and go up to 20%. Now, recently, I sold a commercial building
and that entire capital gain is added on top of my income. So, I immediately went to the 20%
capital gain rate. Plus you get assessed almost 3% more because of the Obamacare surtax and then many
states has also a tax on capital gains. I shelled out about 28% on the sell of that building.
So, that is the capital gain tax. Now, what Biden wants to do is change that to ordinary
income because money is being transferred. And so, a lot of people try to avoid paying
the capital gain tax by continuing to trade into like properties. These are called 1031 exchanges.
Those are going to all be for naught it looks like because Biden wants to do away
with a step-up in basis on long-term capital gains. This means that if you inherited that
rental property from your folks when they pass away, it used to be and it has been for years
that you would get a step-up in basis. if it's worth a million when you inherit it, you only have
to pay a capital gain on what you sell it for over and above what it was worth when you inherited it.
You got a step-up in basis from 250,000 up to a million without having to pay that tax.
Biden wants to do away with that. In other words, if you sold that million-dollar rental
for a million one under the Trump tax era there, you would have only paid maybe 20,000 in federal
capital gains tax. Under Biden, you would have to pay tax on the entire gain if your parents
had depreciated down the properties over that 30-year period. And so, that means you would pay
40%, 39.6% plus the about 3% for Obamacare. 40% on a million is 400,000, instead of
just paying 20,000? Yeah, Joe Biden is planning on getting a lot of tax revenue by doing this because
the people that he's generally taxing can't complain about it because they're 6 feet under.
That's the capital gain tax. Well, that brings us to the third tax, the inheritance tax. Now,
this is also called the estate tax and this is on the transfer of all of the assets after
both a husband and wife pass away. As those assets, everything you own as it's passed down
to non-spousal heirs --your children and so forth, your family. There's exclusions that allow between
a husband and wife almost 23 million dollars to be transferred without incurring an estate tax.
It used to be anything over a million you had to pay. And many states still have only the first
million is exempt. But Hillary Clinton wanted to lower down the federal threshold down to a
million again. Now, I don't know what President Biden has up his sleeve he may do a similar thing.
But he wants to raise that rate from 40% up to 67%. That's a substantial. More than 50% increase
as money is transferred down to your non-spousal heirs. So, between the capital gains tax and the
inheritance tax and income tax. Many people's wealth as it transfers to the next generation
will see losses of 60 and 70 percent and even more depending upon the state tax where you live when
there is a capital gain incurred or realized and there is an estate tax let alone income tax. So,
these are the initiatives that president Biden has because he needs to raise tax revenue and
he needs to do it quick. He doesn't want to wait around for the economy to pay him back. And so,
his solution will be to raise taxes. So, what can you do to avoid paying that? So, I've been
helping people for 4 and a half decades redirect otherwise payable taxes to causes they support.
And I have other episodes that talk about this. If this has intrigued you, I have written 11 books so
far. My 12th one is about to be released. But my most recent bestselling book and we're going
through hundreds of these a week. It's called The LASER Fund. It's actually 2 books in 1.
This one is 200 pages, 14 chapters with all kinds of charts and graphs and explanations of how you
can convert a lot of your money, your assets to tax-free vehicles. What I call The LASER Fund,
liquid asset safely earning returns spells that acronym. The other book, you flip it over and this
is 100 pages, 12 chapters that have 62 actual client examples of how people have redirected
their money into tax-free vehicles, a portfolio where it doesn't matter what tax rates go to.
They're immune from not only income tax. But you can also keep it out of the estate and this is far
better than hoping someday you get a step up in basis on long-term capital gains. This is what I
would love to do is gift you a free copy of this book. So, to claim your free copy, you simply go
to laserfund.com, LASERfund.com. You click below on the link. And you contribute a nominal amount
towards the shipping and handling. I'll cover the rest of that cost and I'll buy the book.
I'll fire it out to you but check out other ways to listen and learn or watch and learn. There's an
18-hour masterclass that we teach that talk about this in-depth far more than you'll even get from
the book. So, this is to your brighter future. I want you to study and learn and take ownership
and redirect otherwise payable taxes to causes you support so you don't outlive your money.