Since Joe Biden was inaugurated on the 20th of January, it is a good time to address some changes he might make based on his platform. The question is, what does “BIDENOMICS” mean to your wallet or purse?
Over the years, I have found that politicians’ actions are often incongruent to their words. Here are some of his proposed changes:
In essence, his proposals would be taxing the rich and protecting the middle class. Based on our current national and state budget deficits, I do see the middle class paying more taxes eventually.
President Biden has vastly different viewpoints on many issues than former President Trump, especially on energy, climate change, health care and infrastructure. The “Green New Deal” was a centerpiece in Biden’s campaign.
Some areas where President Biden said he would concentrate on include:
There has been much unhappiness and angst over the fact that Congress had taken so long to pass an additional stimulus package, since the one that ended on July 31, 2020.
Some highlights of Biden’s $1.9 Trillion stimulus relief plan called The American Rescue Plan include:
Jobless workers will get $300-$400/week through September 2021.
Individuals making less than $75,000/year receive $600, couples making up to $150,000/year receive his target $1400 and $600/child.
Triple-P (Paycheck Protection Program) Funding ($284B) plus $20B for businesses in low-income communities, and $15B for struggling live venues, movie theatres, and museums to name a few venues.
What we do NOT know:
What we DO know:
Biden’s Taxes on Wealthy Estates: example of a $100M estate (#’s are in Millions)
Value of the Original Asset ($100M) $100
Cap gains taxed as ordinary income 39.6% + 3.8% NIIT*= 43.4%
Capital gains tax owed: $43.40
Value of the Remaining Estate: $56.60
Biden’s estate tax exemption ($3.5 million) $3.50
Taxable estate $53.10
Biden’s estate tax rate (45%) 45%
Taxes owed on the estate $43.40+ $23.90
Total taxes paid on a $100 million asset = $67.30
Effective tax rate 67.3%
*Note: NIIT (Net Investment Income Tax) is an Obama care tax.
This may or may not happen; however, if everything proposed becomes law, there will be a renewed interest in ILIT (Irrevocable Life Insurance Trust) owned life insurance to leverage off life insurance companies (instead of paying dollar for dollar) to pay these taxes with pennies on the dollar, which my firm we can assist with.
Feel Free to reach out to Robert Intelisano CLU, CSA, LUTCF who is a CSA (Certified Senior Advisor) and who owns an independent Forest Hills based insurance agency since 1999 at Rob@InsuranceDoctor.us.