Joe Biden's Tax Plan Explained - How Joe Biden Will Affect Your Wallet

it looks like joe biden is moving into the white house and if you're wondering what this means for your money watch this video until the end to find [Music] out what's up everybody i am desperate singh from the minoritymindset.com and welcome to the minority mindset after a very heated election it looks like joe biden has won although there are lawsuits still going on and president trump doesn't agree but joe biden is doing things on living life as if he is the 46th president of the united states now i'm not here to debate about who should be president or voting or anything like that i'm here to talk about your wallet more specifically how will joe biden's policies affect your money and your wallet there are five ways that i'm going to be going over in this video how joe biden and his policies will affect your wallet first has to do with income taxes second is homes and the housing market third is capital gains fourth is businesses and how businesses will be taxed and fifth is the probability of all of this happening these are the five things that i'm going to be talking about in this video so make sure you watch this video until the end but before we get into that i need you to do me a quick favor and smash that thumbs up button below the way the youtube algorithm works if you do not smash that thumbs up button then youtube is much less likely to show you and other people our financial news and education videos we're going to start by talking about the first thing income taxes how do joe biden's policies affect your taxes so there's a little bit of uncertainty here because joe biden says that he's gonna only increase taxes on people making over four hundred thousand dollars a year while donald trump says that joe biden's gonna increase taxes on everybody the reason this is so confusing is because joe biden keeps saying that he's going to repeal donald trump's tax cuts and donald trump's tax cuts cut taxes on pretty much all americans across the board so if joe biden repeals donald trump's tax cuts that means the taxes for everybody will go up but at the same time joe biden also says that he's not gonna raise taxes on anybody unless they're making over four hundred thousand dollars a year to put this in perspective let's say you make forty thousand dollars a year before donald trump's tax cuts your top tax rate under forty thousand dollars was 25 this doesn't mean that you're going to pay 25 taxes on all 40 000 this is a marginal tax bracket which means that for a certain percentage of your income you're going to pay 25 in taxes trump's tax cuts change this from 25 percent down to 22 percent so again you're not paying 22 on all 40 000 but the highest marginal tax you're gonna pay on this forty thousand dollars is twenty two percent if you're confused about what this means i'll show you really quickly here's how marginal tax rates work under the trump tax plan for the first ninety seven hundred dollars of income that you make you are going to pay ten percent in taxes so whether you make forty thousand dollars or four million dollars the first ninety seven hundred dollars is going to be taxed at ten percent then after that between ninety seven hundred dollars and thirty nine thousand four hundred and seventy five dollars you're going to be paying taxes at a rate of 12 percent so for every dollar you earn between ninety seven hundred dollars and thirty nine thousand four hundred and seventy five you're going to be paying twelve percent of taxes for this bracket and then for every dollar you earn between thirty nine thousand four hundred and seventy six dollars and just above eighty four thousand dollars you are going to be paying twenty two percent taxes so this again is a marginal tax bracket which means this is how much money you're paying in taxes for this bracket and so now if you're making forty thousand dollars a year your top tax bracket is right in here because forty thousand dollars is between thirty nine thousand eighty 084 so your top tax bracket is 22 these are the numbers under the trump tax plan before the trump tax plan they were a little bit higher because the top tax rate for someone making 40 000 was 25 if you're one of the high income earners and you're making four million dollars a year the highest top tax rate before the trump tax cuts was 39.6 and under the trump tax cuts this was brought down to 37 again this does not mean that you're paying 39.6 or 37 on all four million dollars it's on all money in the top tax bracket like i just showed you what we know for sure is that joe biden wants to increase taxes on all people making over 400 000 a year and he wants to bring it back to 39.6 percent as the top tax bracket so this is what we know for sure if you make over four hundred thousand dollars a year joe biden's goal is to bring it back up to 39.6 so now if you're making four million dollars a year that means for every dollar you're making over four hundred thousand dollars you would be paying 39.6 percent not 37 the question mark is whether that would also happen here because joe biden says that he wants to repeal donald trump's tax cuts but he also says that he only wants to raise taxes on people over four hundred thousand dollars a year so this is where the uncertainty is rather if someone's making under four hundred thousand dollars a year if their taxes are going to go back up the second major change that joe biden's proposing is social security taxes so as you know social security is dying i mean it's running out of money and so joe biden's plan is to raise social security taxes right now the way social security taxes work is 12.4 percent of income is taxed for social security only this is in addition to your income taxes twelve point four percent of your income goes to social security as long as you make under a hundred and thirty seven thousand seven hundred dollars a year so for your first 137 thousand seven hundred dollars a year twelve point four percent of your income goes to social security and again this is in addition to your income taxes now out of this twelve point four percent six point two percent is paid by your employer and six point two percent is paid by you so your boss is paying some of your social security taxes and you're paying the other half of your social security taxes but if you make over a hundred and thirty seven thousand seven hundred dollars a year you're only paying the social security taxes on the first 137 700. after this you're not paying any social security taxes but joe biden wants to change that joe biden wants to create this kind of like doughnut hole tax structure where if you make under 137 700 you have to pay the social security taxes of twelve point four percent but if you make money if you make income over four hundred thousand dollars a year then you have to pay these taxes again every dollar you earn between zero and a hundred and thirty seven thousand seven hundred dollars you're gonna have to pay six point two percent and your employer is gonna have to pay six point two percent for social security and then for every dollar you earn over four hundred thousand dollars from your job six point two percent is going to have to be paid by you for social security and 6.2 is gonna have to be paid by your employer for social security so it creates kind of this doughnut hole because for all this income let's say make that empty all this income between 137 000 and 400 000 you don't have to pay social security taxes on it so it creates this donut so who does this affect the most well we're uncertain for everybody making under four hundred thousand dollars a year it's very unclear what's going to happen to you but everybody making over four hundred thousand dollars a year from their salary so high income earners doctors attorneys if you are one of those people then you can expect your tax rate to go up you're gonna have to pay this higher income tax and you might also be subject to social security taxes on every dollar you earn over four hundred thousand i missed a zero dollars second let's talk about homes you might remember during the 2008 crash when the whole real estate market collapsed there was this incentive created by the government which gave first-time home buyers a fifteen thousand dollar credit to buy a home what this did was it incentivized people to buy a home because remember during that 2008 crash nobody was buying a home so they created this credit to make people more interested in buying a home for them to live in by giving people free fifteen thousand dollars to buy their first home joe biden wants to bring this fifteen thousand dollar credit back for first time home buyers so he wants to bring back the american dream of buying a home by giving people free money fifteen thousand dollars to buy their first home now obviously there's a cost to free money and there are problems that do arise when people buy homes who cannot afford them we saw what happened in 2008 but if you are a real estate investor or if you're involved in the real estate market this is definitely something to pay attention to third is capital gains taxes now although i am an attorney i am not your attorney so if you have specific tax questions make sure you talk to a tax professional in your area the way long-term capital gains work is the government wants to incentivize you to invest your money for the long term so what they do is if you invest your money and you hold your investment for longer than a year you get favorable tax rates called long-term capital gains rates and the way it works is if you make between zero and forty thousand dollars a year and you make this long-term capital gains profit like you buy a stock and you sell it for profit after a year then if you make this much money your taxes are going to be zero percent on your capital gains profits so to give an example if you make 30 000 a year from your job and you bought a stock and two years later you sold it for a five thousand dollar profit you would pay zero dollars in capital gains taxes on the stock profit because you held the stock for longer than a year and you are within this bracket which lets you pay zero percent taxes on your long-term capital gains again this is to incentivize people to invest their money for the long term because you get low tax risk on your investment profits if you make between forty thousand dollars and four hundred and forty one thousand dollars i just rounded these numbers to make them easier then you're going to pay 15 taxes on your capital gains rates and if you make more than four hundred and forty one thousand dollars a year then you're going to be paying 20 taxes on your long-term capital gains so now if you go out and you sell an investment property or you're selling an investment and you make a hundred million dollars or you make 20 million dollars when you make a hundred thousand dollars the maximum you'd be paying is 20 on these taxes now let me put a little disclaimer there if you are a really high income earner there's another small fee that you'd be paying in taxes but in general the highest taxes you'd be paying on your long-term capital gains is 20 percent this is why investors love investing their money because they can grow their money much bigger and pay less money and taxes remember what i talked about in the first point where you'd be paying 30 40 percent of taxes on income well in investments the max you'd be paying under these rules is just 20 percent joe biden wants to change this again there's some uncertainty as to what he wants to do some media outlets say that he wants to get rid of capital gains rates completely and just make this like your ordinary tax rates so instead of looking at these rates you're going to pay taxes just like you would if you earned this money from a job but other sources say that he doesn't want to do that other sources said that he wants to just change these rates for people who make over a million dollars a year so if we stick with that example where if you make over one million dollars a year he says that he wants to charge 40 taxes on capital gains for this so now if you're making one or two million dollars a year and you sell an investment for five million dollars of profit now instead of paying 20 you're gonna pay double that at 40 taxes again there's no one straightforward answer as to how joe biden would treat long-term capital against taxes because we've heard different answers in different places but this kind of gives you an idea fourth let's talk about how businesses will be affected and i want to start by talking about how you can take advantage of a joe biden presidency by investing in the right businesses from an investment perspective there are three areas that you want to pay attention to in the joe biden presidency infrastructure green i'm gonna show you what that means in a second and health care infrastructure because joe biden talks about how he wants to improve the infrastructure of america as you already saw joe biden wants to increase taxes in america and one of the things that he wants to do with this new taxes is improve the infrastructure which means construction companies could see more business now again investing has risks you are never guaranteed to make money when you invest so always do your own due diligence and never blindly listen to a random guy on youtube but these are just things to think about if joe biden does invest a ton of money into infrastructure construction companies are going to need operating equipment and machinery so companies like caterpillar could see more business second let's talk about green because there's a couple things that i want to talk about when it comes to green first is green and alternative energy so this is things like solar power wind power you bet that these companies are going to get more investment from the government because joe biden has said that many many times so we could see a boom in the green energy business if the government gets behind it more and the other side of green is well cannabis because democrats in general are more pro cannabis now i don't smoke weed and i don't know much about the business and i don't really like to invest in things that i don't know but this is something for you to maybe pay attention to and third naturally is healthcare especially with this health pandemic that we have going on we're gonna see people administer these vaccines and we're gonna see more treatments be created so chances are there's going to be more money flowing into the health care sector on the flip side of things joe biden also wants to increase taxes on businesses because right now businesses pay a corporate tax of 21 and joe biden wants to raise this to 28. so he wants businesses to pay more money and lots of americans feel like they're cheated because they say that businesses are not paying their fair share and so joe biden wants to make businesses pay more taxes now you should understand that raising taxes on businesses is a double-edged sword because businesses like to maintain a certain profit structure and if businesses have to pay more money in taxes and they have less money in their bank account you could see more layoffs and you could see less jobs because businesses just have to pay more taxes to stay in business so we talked about a lot of things that joe biden wants to do but now we should talk about the probability of this happening first joe biden has to get into the white house now joe biden thinks he has one and the whole democratic party thinks he has won but donald trump doesn't so uh i don't know it's a strange situation but if he gets into the office let's assume that that happens second joe biden can't just come up with a plan and make it happen we are a democracy which means he needs this plan to be approved by the house and the senate this gets more into the political side of things and i'm not a political commentator or political expert by any means but the house in general is more democratic favored and the senate at the time we're recording this video still has more of a republican majority so if joe biden goes out there and he tries to pass these major tax plans and the house passes it because they support joe biden and then it goes to the senate and they reject it because the senate has more republicans then you're not going to see a lot of stuff get passed so this is where there's more uncertainty as to what's actually going to get passed and how much of it is going to get passed because you will see that people will try to pass plans with a bunch of different things packed into it and then they're going to slip in different tax changes into it kind of like piggybacking this like a trojan horse to get it passed and so we don't know what's going to get passed or how much yet so this is where the uncertainty lies the key for you through all of this is to understand how you can take advantage of what's happening that way you can take care of your family you can take care of your finances and this is what helps us stay up to date on what's happening in the top finance and business news and if you're looking for an easy way to do that that's why we created the free market briefs newsletter where our team first breaks down the top finance of business news and then we show you how this news affects your wallet that way you can be smart with your money this newsletter is completely free and you can subscribe to our free finance and business newsletter by clicking the link up here or by clicking the link in the description below by the way our financial news emails are separate from our financial education emails thank you for watching if you enjoyed this video share with one friend that we can help spread the word if you want to learn more about how you can save money during this holiday season i already made a video on this and you can watch this video on youtube by clicking this button right over here thank you for watching and as always keep hustling

Channel: Minority Mindset

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Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, get money smart, joe biden, joe biden tax, biden tax policies, biden tax, biden tax plan, biden raise taxes, joe biden raise taxes, tax plan, will taxes go up, biden tax hike, biden taxes, joe biden tax hikes, raising taxes, joe biden housing, joe biden business, joe biden income tax, joe biden social security, jue biden corporation, joe biden trump tax cuts, repeal trump tax cuts, social security tax plan

Id: arCWc340Ltc

Length: 15min 23sec (923 seconds)

Published: Wed Nov 11 2020