“Mr. Biden is going to roll out a plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $1-T in childcare, universal pre-kindergarten education and paid leave for workers, his version of infrastructure” — Paul Ebeling
Key Findings
- Mr. Biden, according to the tax plan he released during his campaign would enact a number of policies that would raise taxes on individuals with income above $400-K, including raising individual income, capital gains, and payroll taxes. He would also raise taxes on corporations by raising the corporate income tax rate and imposing a corporate minimum tax.
- Biden’s plan would raise tax revenue by $3.3-T over the next 1 yrs. When accounting for macroeconomic feedback effects, the plan could collect about $2.8-T the frame. This is lower than originally estimated due to the revenue effects of the VirusCasedemic and economic downturn and some tax credit proposals.
- The Biden tax plan would reduce GDP by 1.62% long term.
- The Biden tax plan by Y 2030 would lead to about 7.7-% less after-tax income for the Top 1% of taxpayers and about a 1.9$ decline in after-tax income for all taxpayers on average.
Mr. Biden wants to turn America’s winners into losers:
He proposes reducing the federal estate tax exemption to pre Y 2017 tax reform levels. The proposal also includes eliminating the step-up in basis for inherited capital assets.
Currently, wages above $142,800 are not subject to the Social Security payroll tax. He proposes making wages above $400-K subject to the tax.
His most notable change is to increasing the Top corporate tax rate from 21% to 28%.
This is a troubling proposal: Mr. Biden seeks an international agreement with foreign countries to impose global minimum taxes on corporations so that no country can “gain a competitive edge.”
Rather than “America First,” his administration is working to deny a competitive edge for American businesses and workers.
Biden Vs America’s homeowners and commercial real estate owners: His plan is to eliminate 1031 Exchange, a 1031 exchange is a swap of 1 investment property for another that allows capital gains taxes to be deferred. Most people do not buy a forever home the 1st time. Most will buy a humble house 1st and gradually upgrade to a better 1 after a few yrs of working, saving, and investing. The 1031 rule lets people defer the profit gained from selling their 1st home.
Then there is his Death Tax: He plans to eliminate the step-up basis. This is essentially a “death tax”. An example: let’s say your parents bought a house in Y 1970 and paid $50,000 for it, and today the house is worth $500,000. If your parents were to pass away and leave you the sole beneficiary of the house, there is a step-up basis law in place which allows the original cost basis ($50,000) to “step-up” to today’s full fair market value for tax purposes ($500,000). If you were to sell the house the next day for $500,000, there would be no tax due on the $450,000 “gain”. Under Mr. Biden’s tax proposal, this step-up basis would be eliminated, and therefore, you would be responsible for the tax due on the $450,000 “gain”.
Further, he plans to ramp up IRS tax enforcement. The best way to encourage compliance is to simplify the tax code. But, his plan would make the tax code even more complicated and expensive to comply with.
The added complexity would make corporate accountants and lawyers more important, but would lead to fewer investments in other employees at companies facing higher tax burdens.
“As an recognized worldwide expert, financier and economist, I can only say that Mr. Biden’s tax plan would have a disastrous effect on our recovery. From real estate 1031 exchanges to increases in both corporate and personal taxes all would be treated negatively and their effects would not be reviewed positively in our financial markets. Also, such taxes on corporations would be passed through to consumers as they have demonstrated in the past when such were put into effect, thus adding to an already hidden inflation, not 1.4% as we all know but in reality, 5% if one looks at such basics as real estate, food and energy costs.
“What Mr. Biden and current members of his Administration plus certain members of Congress need a basic course in Inflationary Finance 101. Then, they would quickly learn that increasing taxes in a recovery market is not the way to go. If anything, they should cut out their pork-barrel spending and more prudently examine how they are spending current tax dollars. Disincentives to not work, like increased social welfare costs, is not the answer either.
“One particular area that should be focused upon is both drugs and homeless housing but you will find little if any dealing with these acute problems.. The homeless should also be taught productive skills so that they get them out of their psychological depression environment and give them a positive awareness that they can securely return to the workforce with sustainable skills.
“However, can you find this in any of the Federal, State or State current government proposals – NO, not even in the fine print either or hiddenly inferred! Their solution which is only now being partially addressed is to build some homes, minimally at bests for they are not in 1,000 lot housing projects – only 100 Units here and there, if that, totally inadequate to solve the problem. Thank God, winter is now over but it is still cold in some parts of our country, especially at night.
“Besides inadequate housing being constructed, no focus is being given to job new retaining skills or their professional, experienced, psychological assistance – both sorely needed. Further, your open door immigration policy is going nowhere – it is only adding to our already burdening social welfare costs and more criminal activity in our streets.
“So, Mr. Biden refocus yourself – Stop trying to tear apart the former President’s achievements for he proved that our economy can be rejuvenated, both before and post pandemic. Also, Stop the port barrel spending in Congress.
“My advice a more productive approach would be to add to them and come up with some added creative approaches to accelerating our recovery for America wants to go back to work,” says LTN economist Bruce WD Barren.
The Big Q: Will Mr. Biden’s tax proposal get fully enacted?
The Big A: No, the prospects for enacting new tax policy of any nature remains uncertain.
Call your Congressman or Congresswoman and say No to Joe!
Have a healthy week, Keep the Faith!
