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Have you ever wondered, how much money should we pay in taxes? How much money is considered rich in America? Let's discuss what it means for your money if we get Joe Biden as president, and what would happen if we kept our current president. This is something that wasn’t really talked about much in the debates, but it’s an issue that affects all of us, no matter how much money we make.
The democratic nominee (Joe Biden) has made it very clear that if you earn $400,000 per year, you are rich. Technically speaking, you are not the 1% yet, instead - that would put you in the richest 1.8% of earning households. However, to Joe Biden’s point, that group of people in the 1.8%, make up 25% of the entirety of money that is made in the United States. To be considered in the top 1% nationally, the true rich category, you’d need to make $515,000 a year.
Pros for your money if we get a democratic President in 2021:
Here is the good news. Joe Biden wants to help people that are buying a home for the first time. Under Joe Biden, people would get a $15,000 tax credit for buying their first home. While this sounds great, something people may not realize is that it would also increase the price of real estate across the board meaning you would also take on more debt and pay more over the course of your life.
If you are a parent and you have kids, great news, the current CTC, child care tax credit is capped at $2,000. Joe Biden proposes the child care tax credit to be increased to $3,600 or $300 a month for each child ages 5 and under, and $3,000 for kids 6 and over but under age 17 as long as the pandemic lasts.
Plus he wants to offer a refundable tax credit for health insurance premiums which is money we pay for our health insurance every month.
If you are a student, very good news, if your household makes less than $125,000 per year, Mr. Biden wants to let you go to a public university for free for 4 years.
Here are the negatives for your money:
He wants to increase taxes on 3 major aspects, individual income, payroll taxes and capitals gains taxes. For 98% of people, taxes will not increase as far as money you earn from your job. For people earning more than $400k per year, taxes could go back up to 39.6%. If you make less than that, your income taxes will not increase. The second category is payroll taxes. If you make more than 400k, you will pay an additional 12.4% in social security payroll taxes.
According to research from the taxfoundation.org - payroll taxes are paid almost entirely by you - the employee. That’s because tax burdens are determined by the market through a concept called “relative price elasticities”. The market decides via supply and demand. Turns out, there is a lot more supply of people wanting a job, then there is a demand to hire those people wanting that job. So when governments increase payroll taxes, corporations have to react, and they do that by adjusting how much they pay us. Technically speaking, the cost of payroll gets passed on to us as an invisible tax in the form of - decreased wages.
If you’re an investor in the stock market under Joe Biden’s tax plan, corporate taxes will increase from 21% to 28% which means less money that corporations get to keep to pay to shareholders or reinvest back into their growth. This affects everyone that has a 401k, an IRA, and is invested in the stock market.
This is money you make when you sell your stocks or get paid dividends. Mr. Joe Biden wants to take away the tax structure on investments and instead tax them exactly the same as you would get taxed on your income but only for people making $1 million a year or more.
Lastly, he wants to get rid of the step up in basis which is how parents pass on their assets to their children. Upon passing, taxes will have to be collected on what they originally purchased for, and what you inherited them at
*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
Further Research:
5 Changes To Taxes under Joe Biden:
Case For Changing Tax Code:
Who Pays Most Of The Taxes:
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