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Biden’s Tax Plan. Winners and Losers.

RL067 - Retirement Lifestyle: Biden’s Tax Plan. Winners and Losers.

On this episode of the Retirement Lifestyle Show, Roshan Loungani, Erik Olson, and Adrian Nicholson talk about the second phase of President Joe Biden's Build Back Better agenda: The American Jobs plan. They analyze how the project affects your investment portfolio, impacts on long-term capital gains, and propose tax strategies to lower your taxable income.

[06:50] The Build Back Better Agenda

[13:35] Analyzing the American Jobs Plan

[15:10] Individual Income tax and Estate Taxes

[24:49] How to Lower your Taxable Income

[27:05] Impacts on Long-term Capital Gains and Qualified Dividends

[31:54] The 10:31 Exchange in Real Estate

[37:10] Explaining the Step-Up Basis on Inherited Assets

[44:50] The Corporate Tax Rate Proposal

[51:30] The Winners and Losers of the American Jobs Plan

For the full show notes keep scrolling down!

Roshan Loungani can be reached at or at 202-536-4468.

Erik Olson can be reached at or 815-940-4652.

Adrian Nicholson can be reached at or at 703-915-8905.

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Full Show Notes:

The American Job's Plan

The second phase of Joe Biden's Build Back Better agenda – the American Jobs Plan – was recently unveiled and focused on repairing America's physical infrastructure, manufacturing industries, and expanding long-term health care services. The plan comes with a $2.7 trillion price tag set to be spread out over eight years and paid for with what the government calls the 'Made in America Corporate Tax Reform Plan.' This tax reform plan is entirely different from measures employed in the stimulus package, which relied on deficit spending. Moreover, President Biden vowed that his administration would not raise taxes on people making less than $400,000 a year.

A New Top Tax Rate of 39.6%

Although households making less than $400,000 a year will not be affected by the proposed tax rates, Biden aims to fund the American Jobs plan by collecting more taxes from Americans earning more than $400,000 a year. This will be archived by raising the top income and capital gains tax rates, closing tax loopholes, changing the taxation of wealthy estates, and stopping tax evasion. The tax plans will raise top income tax rates to about 39.6% from 37%. Biden's administration claims the 39.6% rate would apply to the top 1% of Americans where it's estimated that households that earn roughly $540,000 income fall among the wealthiest 1% of taxpayers. Nonetheless, tax breaks will be extended to first-time homebuyers, families caring for children and elderly relatives, and electric vehicle purchases.

Long-term Capital Gains and Qualified Dividends

Households earning more than $1 million a year are set to have their long-term and short-term capital gains taxed at 39.6%. Presently, all long-term capital gains are taxed at 20%. However, when you add the 3.8% net investment income tax, the proposed rate suddenly jumps to 43.4%, and as much as 48% if you include state income taxes. Further, inherited assets with gains of more than $1 million since the time they were bought will be taxed upon the owner's death. Financial experts do not anticipate a wave of panic selling, but Roshan, Erik, and Adrian agree that 2021 is an excellent time to start thinking about tax strategies.

All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.

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