Hey everybody it's Sam Kwak here one of the Kwak Brothers now a lot of you guys
know that president biden has a proposal of increasing the top capital gains taxes from 20%
to 39.6% and that's just the federal rate so if you include the state rate in there as well
certain states like california may pay closer to 60% capital gains taxes and yes this capital gains
taxes only apply to individuals making over a million dollars now we have yet to confirm
whether this is an agi number an adjusted gross income or an actual gross income now my guess
is that the tax increase will only kick in if your adjusted gross income is over a million dollars
let's say your investment or business made a million dollars but you had close to $900,000 of
business write-offs and deduction that ultimately means that your net income will be a hundred
thousand dollars which technically you didn't make a million dollars therefore you would not pay the
increased capital gains taxes now that's what i'm hoping for and that's what i'm guessing because
it doesn't really make sense mathematically if it were to apply on gross income so back to the
latest news president biden is already thinking about taking the effective date on the increase
on the capital gains taxes and retroactively make it effective starting april 2021. so if
you recently sold a property or an investment and you're making over a million dollars agi
well it's kind of too late and you may end up paying to increase capital gains taxes if you
do make more than a million million dollars a year now of course all these tax increase proposals are
to ultimately fund the biden's plan of passing the american family's plan which ultimately includes
four more years of free public education it takes the top order income tax rate from 35 to 39.6
percent making sure that all americans press the like button on this video and of course increase
on earned child tax credit so the ultimate question is why why is biden planning on taking
the capital gains tax increase and retroactively making it effective starting april 2021 what it
turns out that historically whenever the capital gains tax increase were to be announced or there's
a proposal the investors will frenzy to sell before the new capital gains tax would increase
so going back to 1986 when the capital gains tax increased from 20 to 27 there was a 60 increase
of capital gains acceleration which means that more and more investors were selling
their assets and their investment so that they could avoid the increased capital gains likewise
back in 2012 when the capital gains rate went from 15 to 25 when that proposal was announced
a lot of investors jumped shipped and started selling like crazy so of course the government has
figured that out and my guess is that biden does not want that happening again and wants to avoid
investors selling off early just so that they can cash in at a lower tax rate so at any given point
that if this proposal were to get passed any time this year or next well pretty much everything you
sold throughout april and on will be subject to a higher capital gains tax rate and of course
just as a reminder uh this will only apply to individuals making a million dollars or more
each year but of course just like what i mentioned last time in my last video when i talked about the
increase of capital gains taxes just because it doesn't affect you directly it doesn't mean that
it may affect you indirectly and of course my guess in my opinion is that it will indirectly
affect you because as soon as the institutional investors and these large investment firms start
to cash out or take other measures it could certainly have an impact on your investments as
you're in the market as well so not only is this a bad news for big time investors making more than
a million dollars adjusted gross income this can certainly be a bad news for little guys as well
because at the end of the day we're just small fishes swimming around in a giant vast ocean with
sharks and whales and if it's gonna ultimately hurt the whales then it may hurt us so i don't
know what you guys think about it go and comment down below will this have an impact on the smaller
investors i think it may i think it's definitely gonna have a trickle down effect as far as little
time investors and mainstream investors as well now do you think that capital gains tax is the
only bad thing and the bad voodoo that's happening right now well think again biden's administration
and the proposal is increasing the irs budget by 80 billion dollars to track down and increase
audit activities well that makes sense because as tax rates increase or new taxes get implemented
there can be more individuals in organization seeking ways to avoid the taxes through loopholes
and special interests so i can see why biden is also at the same time while increasing tax rates
and implementing new taxes will also increase the budget of the irs to make sure that policies and
audits are being implemented to ultimately stop erroneous or fraudulent tax returns and again
this will certainly affect you because this will increase the overall volume of audits happening
across all taxpayers and of course if you're making more than a million dollars you're a
business owner or investor i could definitely see audits going up due to this new proposal now of
course to add insult to the injury biden plans on eliminating or at least decreasing the powers of a
stepped-up basis now of course for those who don't know what stepped up basis is let's say that you
own five million dollars worth of investments and assets and you die and it gets passed onto
your hairs whether it gets liquidated or it's a direct transfer now a lot of times any gains
that you've earned in those investments you would not pay any taxes or at least your hairs will not
pay any taxes because you know you'll be dead and essentially you dying would wipe away any taxable
gains at the time of transferring those assets to your hair well biden's proposal is to close that
loop and say you know what we're going to put a limit on how much that could be now of course
there are exceptions such as if you own a personal home and that gets passed down to your kids of
course that won't be subject to any capital gains taxes but right now the proposal on the table is
that if they are a single filer then they could they can claim up to 250 000 exemption anything
more than 250 000 of gain will be subject to taxes with the tax capital gains tax rate and of course
if you've been filing taxes as a married or joined couple then that limit will go up to five hundred
thousand dollars where any gains within zero to five hundred thousand dollars will be non-taxable
but anything above five hundred thousand dollars would certainly be taxable as capital gains so it
certainly does diminishes the benefits and the effects and the features of stepped-up basis
so really after you die the government's got to have your money and that's what this is all about
so that is the latest news when it comes to biden's proposal on not only capital gains taxes
we haven't even talked about 1031 securities exchange when it comes to real estate
uh we talked a little about the stepped-up basis and how that might be eliminated so
guys tell me tell me what you guys think about all this go and leave your comments down below and
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as far as building your personal wealth creating financial freedom and ultimately helping you guys
create the vehicles to those successes so that being said guys stay tuned we'll get to you some
more update go and comment down below whatever you guys think and we'll see you in the next video