May 16, 2022

It Started: My Thoughts On The Joe Biden Tax Plan

Here are my thoughts on the new 2023 budget and tax plan, where the money is going, and the impact this could have throughout the stock market and economy - Enjoy! Add me on Instagram: GPStephan GET YOUR FREE STOCK…

Here are my thoughts on the new 2023 budget and tax plan, where the money is going, and the impact this could have throughout the stock market and economy – Enjoy! Add me on Instagram: GPStephan

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THE NEW 2023 TAX PLAN CHANGES:

28% CORPORATE INCOME TAX (UP FROM 21%)
https://taxfoundation.org/increase-corporate-tax-rate-28-percent/
They estimated that a 28% corporate tax rate would reduce GDP by 0.7% – or, $160 billion dollars, stock and wages would marginally decline…and, 138,000 full time jobs would be lost. Thankfully, they estimate that the “loss” would be gradual, but it could amount to a GDP decline of nearly $720 billion dollars over 10 years…which, is LARGER than the $694 billion of tax revenue that would be generated in its place.

As a result, they believe that – long term – a higher corporate tax would result in incomes dropping by 1.5%-2%. On top of that, another study found that raising corporate taxes was the “most harmful for growth,” suggesting – INSTEAD – that we tax “consumption,” or “recurring tax on immovable property” – which, is another way of saying: higher real estate taxes.

TAXING UNREALIZED CAPITAL GAINS
ONE: It sets the precedent that unrealized profits can be taxed – which, some argue is unconstitutional. For example, “the Constitution denies Congress the power to levy a direct tax unless it’s “apportioned among the several states” in proportion to population. That means that the tax must be spread evenly among every person in every state.”
https://www.heritage.org/taxes/commentary/democrats-proposed-tax-unrealized-capital-gains-likely-unconstitutional

TWO: It would force business owners, who might not have the cash or liquidity to pay this tax bill, to sell a portion of their ownership, potentially losing control of their company – or, sending the stock price falling by allowing more shares to enter the market.

THREE: It sets a dangerous precedent that unrealized gains CAN BE TAXED – and, that threshold becomes an arbitrary number that could be changed over time. After all, what’s to stop them from eventually passing this on to business owners with more than $50 million…down to $10 million…down to $1 million…and, pretty soon – everyone pays some type of unrealized capital gain depending on how well they do?

TOP INDIVIDUAL TAX RATE OF 39.6%
That means, if we use the 2022 tax table as an example…the income that people make over $539,900 would NOW be taxed at 39.6%, instead of 37%….so, that would mean a tax INCREASE of $2600 per $100,000 you make ABOVE $540,000 per year…and, it would raise $186.8 billion.
https://taxfoundation.org/2022-tax-brackets/

Of course, there are OTHER tax increases within this plan, as well…from repealing the 1031 exchange if you have more than $500,000 in profit…getting rid of oil and drilling tax deductions…considering coal royalties to be “income” versus a capital gain…modifying estate and gift rules…and, about 30 other increases throughout 120 pages of text that takes WAYYYY too long to read through….
https://www.novoco.com/sites/default/files/atoms/files/treasury-general-explanations-fy-23-budget-03282022.pdf

Hope this helps clarify things!

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