Protect Yourself From Biden’s Tax Hike

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Transcript

Mike:

And I’m going to give that money to the poor. Okay. That’s what he’s going to do according to him. That’s how he’s going to sell this plan.

Mike:

Here’s the problem with that? It’s pure BS.

Zach:

Mike, how are you this evening?

Mike:

I’m normally a pretty happy guy, right? Pretty laid back. Pretty happy. Uh I’m really not a happy guy tonight.

Zach:

So you’re a little heated right now.

Mike:

I’m I’m pretty steamed.

Zach:

Is it because of what we’re talking about today?

Mike:

Yes.

Zach:

Wow. Okay. So I know before the show you brought me, this article just came out last night. We’re going to be unpacking Joe Biden’s new tax plan and proposal.

Mike:

Yeah. And so for those of you, as you’re listening, you need to understand where I’m coming from. See, I have this incredible disdain for the representatives in Washington, DC. So senators representatives pres. I mean, like, I just think politicians are, well, I put them at a level of, I’m not sure that even put them above used car salespeople.

Zach:

They’re definitely high on your list. Disdain.

Mike:

They don’t have a lot of my entire life. You know, what we do in our office, you know, we help people with their money. We help them make smart financial decisions. My world is all about doing things with integrity, right? That’s my world. I do things with integrity and everyone here in the office we’re very passionate about that. But for politicians, I feel like they’re the exact opposite. They’re just for the most part, this doesn’t describe all of them, of course. But for the most part, I view politicians as scum of the earth and what’s happening right now with all this tax stuff. I mean, to me, it just from a business perspective, it’s the best thing ever, right? From a business perspective, what these idiots are doing in DC best thing for us, for me personally, because we do a lot of tax planning in the office and the more complicated they make the tax system, Hey, the more business for me.

Zach:

Right? So most people can’t just look at the tax code and understand what’s going on or the changes that are going to be implemented.

Mike:

Right. Exactly. But I’m a big believer that complication just leads to, it leads to confusion. It makes it difficult, unnecessarily so. I’m a big believer that simple is better. So here’s what we’re going to do tonight. This is what you’re going to listen to tonight. This is why you want to pay attention. We’re going to share with you what they want to do in Washington DC, to the tax code, how it’s going to affect you. And we’ll talk a little bit about, you know, Hey, what can you do in order to protect yourself? You know, what steps do you need to take this year, this year in 2021, to make sure that you are as well protected as possible against the, I don’t know the doings of those. I, I, there’s a lot of words I really want to use to describe people in Washington, DC. And I probably shouldn’t use them.

Mike:

Sure. So if I’m listening to this at the end of the program, hopefully I can step away with some actionable items that I can utilize in my own planning,

Mike:

As they say in church. Amen brother.

Zach:

Gotcha. Love it.

Mike:

That’s our goal. So let’s, let’s go ahead and dive into this, right? So here we have, and if you’re watching us on the YouTube channel you can see we’ve got this article that Zach was nice enough to print out. I brought it to him, then he printed it out, but it says Biden proposed tax hikes to pay for 1.8 trillion American family plan. So Biden is obviously a tax and spend liberal politician. He wants to propose tax hikes to pay well, what’s he want to do first. He wants to say, we’re going to play Robin hood. That’s what he wants to do. He says, I am going to take money from the “rich” in quotation marks, air quotes, air quotes, right? Yes. And I’m going to give that money to the poor. Okay. That’s what he’s going to do. And according to him, that’s how he’s going to sell this plant. Okay. Here’s the problem with that. It’s pure BS. He’s going to do apparently all kinds of great things with this, right. It’s called the, I love this. The families, American families plan

Zach:

Sounds great from the title.

Mike:

My God, the one thing they know how to do in Washington, DC. They know how to market, right? I mean every tax law that they want to pass has some, some, you know, acronym or something to it that it’s all about the families, it’s all about the people and folks. It’s never about the people. It’s never about that. It’s about them in a power grab in Washington, DC. That’s what it’s about. Right? But here you go. This is what he wants to do. $1.8 trillion in spending and tax credits for American families and workers over 10 years. Right. They want to give universal preschool for three-year-old and four-year-olds. Right? Two years of free community college to all Americans, including dreamers, of course nationally paid family and medical leave program. Two years of subsidized tuition to attend, you know, different universities and other institutions.

Mike:

They want to increase Pell grants. They want to expand the child credit. They, I mean, it’s like every time they do this, because they don’t understand economics like basic economics, they don’t understand them at all. Every time they do that, they never get the outcomes they want. Right. They always end up, ends up getting backfired. It just doesn’t work in the way they are like, example. I want to give universal preschool for three-year-olds and four-year-olds what is that going to look like? Right. What does exactly does that look like? Are you just gonna get, just pay money to these preschools? So now the preschools to get paid, I have to go through some governmental program, right? Yeah. Like that’s going to work. Right. I feel like I maybe need to replace Rush Limbaugh or something to that. I’m feeling just on fire here, by the way.

Mike:

I apologize to anyone out there listening. If you’re, if you support what he’s doing. Well, I just can’t see eye to eye with your belief system there probably. But you know what, here’s the deal. We could probably have an adult conversation.

Zach:

Sure.

Mike:

Whenever a politician wants to increase taxes, they never ever, ever talk about how it’s going to affect the average person.

Zach:

It’s always the rich.

Mike:

They’re only going to talk about how they attack the rich, the rich and that quotation marks. So this is how he’s going to pay for all this free stuff he wants to give away. And as someone who has paid for there, you know, I have five children. I paid for college for every one of them. And you know what that’s just part of the deal, you know? And now he wants to give away free college to people.

Mike:

Great. That means I get to pay for a bunch of other kids college too. Yeah, that’s pure. Anyway, so here we go. First, he says, I want to increase the top individual income tax rate to 39.6% from 37. So we’re going to increase the top rate by 2.6% whoopy. Who cares? Do you think that’s actually going to do anything?

Zach:

And it’s a small hike.

Mike:

No, it’s not going to do a darn by the way, what he really wants to do, what he really wants to do. He wants to basically eliminate the Trump tax cuts that we had when Trump first took office. That’s what he really wants to do. Part of that is increasing the top tax rate from 37 to 39.6. Notice that’s what he focuses on. What he’s not telling you is that the 12% bracket is going to go to 15, the 22s going to go to 25.

Mike:

There’s going to be 28. You know, today, a married couple can earn 350,000 roughly of adjusted gross income pay 24% or less. What they really want to do is eliminate that and go back to the old tax code, where if you make over a hundred thousand dollars, you’re in the 25% tax bracket or higher. So in other words, he says, Hey, you’re making, if you make over a hundred grand as a household, basically they want your taxes to go up. That’s that’s what is true. And that’s what’s reality. Notice he doesn’t talk about it though. He only talks about the rich side of things, which by the way, is why I like to call politicians weasels. Here’s another one we want to tax capital gains as regular income, but of course, what are they going to focus on? Only for households earning more than how much Zach.

Zach:

Million dollars.

Mike:

A million, we only are going to tax. That’s what we’re going to do. We only want to tax, do capital gains as regular income. If you make more than a million dollars. Now, if you make more than a million dollars, are you one of the rich I would say, yeah, you probably are.

Zach:

I would agree with that.

Mike:

I’m not going to argue that one. Right? What he doesn’t tell you is that one of the things that they would really like to do, one of the things they’re working on is there were, and I’ve heard this from my CPA friends who are knowledgeable about this. What they’re really wanting to do is just eliminate longterm capital gains tax rates all together and just say, Hey, whatever your income tax rate is, that’s also your long-term capital gains tax rate, by the way, believe it or not. I actually am a fan of that, which I mean, what, Mike, you’re a fan of increasing tax rates on people. I know Zach you’re looking stunned right now.

Zach:

I know. I can’t believe you’ve actually agreed with something they have done on this show.

Mike:

Them. Why would I, why would I be, yeah. Why would I be A fan of that? Do you think?

Zach:

I don’t know. Tell me.

Mike:

Simple. It makes the tax code simpler.

Zach:

Sure.

Mike:

So that’s actually one thing I would go for and yes, I know it makes capital gains retire, by the way, what, they’re not telling you what they’re not telling you is if they increase capital gains, what kind of impact do you think that’s going to have on the stock market?

Zach:

Pretty drastic effect.

Mike:

It will crush it. I mean, just heck we saw it was last weekend. So when we saw this, we saw Bitcoin, for example, it lost like huge amounts of money overnight. Why? Because that’s when Biden announced, Hey, I think I want to increase tax rates. If you have over a million dollars, you know what? Bitcoin crashed the market went down dramatically. It came back up the next day because you know maybe it’s not going to happen. The point is here’s reality. Now, mom and dad, the mom and dads throughout the country, all of us, me, Zach, you, everybody listening.

Mike:

You know, we’re all investing money in the market, but what, who really moves the market? Is it the average person who moves markets? It’s really wealthy people. And if suddenly they’re going to be taxed at 40% plus state income taxes if you live in Texas and California, right? If you’re, if they’re going to pay 40% plus state income taxes on their capital gains, do you think they’re going to say, yeah, maybe I’m out of here talking about only the wealthy again, we want to eliminate step-up in basis if you have gains over a million, right? How about that one.

Zach:

Only effecting the rich.

Mike:

Only effect if you have over a million dollar gain, right? Okay. I call BS on this one. They want eliminate step up basis for everybody, for everybody. They’re just telling you it’s for the rich, because it gives them a better chance of getting what they want and then surprise.

Mike:

Oh yeah. It turned out. That was for everybody.

Zach:

Oh, shoot.

Mike:

Right. Gosh, darn it. That’s too bad. So, I mean, these are just a few things that they’re talking about. They’re, they’re working really hard, really hard to get rid of internal revenue code 1031. That’s where you can sell investment real estate, take the proceeds, invest in other investment real estate and pay no tax in that transition. They very much want to get rid of that. Everything they talk about though. Notice when they send this out to the media, what they’re saying, they’re saying it’s only gonna affect the rich and that’s ***** right. That’s it’s going to affect everybody. And we’re gonna talk more about that as we go through the show. And, and by the way, before I forget, like if you’re watching this, we have this wonderful report here, right Zach, that it’s a free report. If you want to know, if you want more information on all of the tax increases nationwide has put together a really clean, a really clean and simple report that talks about, you know, unpacking Joe Biden’s tax plan, right? Proposals for business tax and estate planning. It’s a great resource. It’s free. How do they get it Zach?

Zach:

All you gotta do head on over to 590tax.com again, 590tax.com 590 because we’re listening in on am 590. KLBJ you just head over to that website. You’ll see the report you punch in your name and email address. Boom. We’ll send it to you instantly.

Mike:

So that’s and that’s the number five, nine zero.

Zach:

You got it.

Mike:

So 590tax.com Six characters that’s it.

Zach:

As simple as it is to type it’s even simpler to get.

Mike:

It’s harder to put your name and then get that website.

Zach:

Pretty much. Yeah.

Mike:

Okay. So 590 tax.com. Go there, get a copy. This will get you educated, but then there’s something else I want you to do. Here’s the deal. The Democrats, they they’re in charge of the house. They’ve got the Senate, the vice president that got tie-breaking vote. They’ve got the presidency. They want to increase taxes. Odds are good. It’s going to happen. I mean, you have to assume taxes are going up. They love to tax and spend. So what do you do to protect yourself, right? How do you protect yourself? I’m going to tell you what you’re going to need to do. Like your IRAs and 401ks, they are a target. I guarantee you that is a huge target. So getting that money in your IRAs and your 401ks and your 403bs, getting that money, moved to tax-free accounts like Roth, IRAs, Roth, 401ks, getting that money, move to properly designed life insurance accounts.

Mike:

That’s what you’re going to need to do. You’re going to, and you need to really start jumping on that now you can’t sit here and wait anymore. You’ve got to take action. As you know, in our office, we help our clients with what we call prosperity planning. So what is prosperity? Planning, prosperity planning is where you’re making great decisions in all the areas of your retirement planning. You want to make sure you are making great decisions with your income planning, your investment, planning, your healthcare planning, your family planning. And of course your tax planning and every time the people in DC, when they start raising your taxes, right, that affects your future prosperity in a negative way. So if you think about, I was talking about, if you have money in your IRAs or think about it, that’s a big old pot of money and it’s never been taxed.

Mike:

And in reality, it’s not all your money. So Zach, if you have a 401k at work, right, I know you use the Roth side of it, which by the way is really smart. But let’s say you didn’t, let’s say you had a regular old 401k, you were getting tax deductions on what you put in. You know, if you look at that account, let’s say you had a hundred thousand dollars in that account.

Zach:

Sure.

Mike:

Well, if you look at that account and say, Oh, it says Zach’s 401k a hundred thousand and naturally you think what? I’ve got a hundred thousand. Wouldn’t that be like, cool. I got a hundred grand in my 401k. I’m doing good. But you don’t because you have a silent partner in that 401k. It’s called the IRS.

Zach:

Oh no, our favorite silent partner.

Mike:

Yes. It should say it should be titled Zach and IRS’s 401k. And if you as, you’re listening, you got a 401k. You have a 403b, a 457. You know, odds are for, if it’s traditional. If it’s not a Roth, if there’s not the word Roth in front of it, then you’re just like Zach, in this example, you, your 401k, your IRA is really a joint account between you and the IRS. Now what happens when the people I’m going to put “good” in quotation marks, I should say the weasels in Washington, DC raise taxes on you.

Zach:

I’m getting even less of that hundred thousand.

Mike:

They’re their percentage in your account goes up, your percentage goes down. It’s like a permanent market loss.

Zach:

Doesn’t seem fair.

Mike:

Right. That’s just how it is. So here’s the deal. There’s significant. Especially as you’re in retirement, tax risk is a significant risk in retirement. And if you want to enjoy prosperity in retirement, so your retirement, I mean, it should be the best time of your life, right? And if you’re working still, what do we want. What does prosperity planning do for you? It helps you make work optional as soon as possible, right? Part of prosperity planning is keeping more money in your pocket, giving less money to the IRS. So how do you do that? You do that. If you’ve got a bunch of money in IRAs and 401ks, you do it by starting to transition and you don’t do it all at once typically, usually it’s over a period of time. But you transitioned money away from accounts where the IRS is your partner into types of accounts, where the IRS is no longer your partner where you’re immunizing or protecting yourself from future tax increases. So a Roth conversions part of that, right.

Mike:

That’s one way to do it. Rolling money into life insurance, properly designed life insurance over time. That’s another way that you can do it. And there are others, of course, but that’s why I always tell people, listen, if you’re out there, you know, a lot of you, you have an incomplete retirement plan, right? Maybe you’ve your investing. Maybe your investing is in pretty good shape, but you don’t know how you’re going to pay healthcare expenses later in life. That’s always a big deal. You don’t have your wills and trusts, your state planning up to date, right? You have no idea how you’re going to generate enough income later on to make work optional and taxes. I mean, you have no idea where you are from a tax perspective. So our goal with prosperity planning is let’s help you complete your retirement planning. Investing is part of it, but certainly you want to make sure you’re making great tax decisions so you can truly live that prosperous life. Let’s have us help you complete your retirement plan. Let’s help you with prosperity planning where all of this stuff works together. And part of that, making sure that you’re protected against the IRS and what they want to do in DC, how they want to take your money, you know, and, and put less in your pocket. Let’s not do that. Let’s put more in your pocket. What do you need to do?

Zach:

Yeah. So it’s after hours. You’ll give us a call at our number 512-886-5850. They’ll connect you with somebody who will set up a time for a 15 minute call on our calendar, just so we can learn a little bit about your situation, maybe what you learned on today’s program. See what’s important to you in regards to your retirement planning and see what we can do to potentially help you get there. Hi, and thanks for checking out retirement today. If you like the content we share on our channel, make sure to like, comment, and subscribe. So you can say notified about all of our latest content and videos. Be sure to share all of our information with your friends and family as well. Thanks for joining us. We’ll see you next time.

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