We have been getting a lot of questions concerning the new tax plan proposal. In this week's Arista Advice, we cover a few of the most important points out of the 881 page document.
Hello, welcome to Arista Advice!
Question, week is: "Paul, what's your perspective on the Joe Biden tax plan?" There's a lot of commentary out there right now, and there should be because the House Ways and Means Committee has passed an 881 page tax proposal that is pending. There's a long runway and a lot of miles that still have to be covered. A lot of people who are on the first floor window are already jumping out of their windows, and it is very complex, and there's a lot of do's and don'ts inside of it.
But let's talk about some of the basic essentials of the Biden tax proposal that's out there. We must remember that there's eight Democratic senators who are up for re-election. Seven of the eight are in neck-to-neck single digit races, so there's gonna be a lot of posturing going on with this tax proposal.
They are saying 3.5, but with a lot of the carry backs and carry forwards, it's really about a five trillion dollar tax plan that's out there because the state has to fund some of it, and the federal government has to fund the majority of it.
I have here in front of us the 2021 tax tables. Seven tax rates inside a married filing joint. In 2022, the 7 will exist, but the highest tax rate goes from 37 to 39.6. It also lowers from 628 to 450, and then the 35% tax rate goes from for 418 to 400. So they're capturing more people in the higher tax rates sooner.
Then what's very important is the corporate tax rates. They are introducing a tiered system in corporate tax rates. The corporate tax rate is 18% on the first four hundred. 21% up to 5 million, and a 26.5% in excess of 10 million.
And what many people are talking about - the capital gains tax, many people had hypothecated that it would be ordinary income. They backed it down all the way down to 25%, so that's going to be going from a 20 to 25%.
Also, the modified adjusted gross income, it will be including investment income derived off of ordinary course of a trade or business. As you can expect, in the evenings and during the day, we're reading many pages of this 881 proposal tax bill, and it's sort of just something that we like to do, to read tax code and to read corporate and individual do's and don'ts, but let's not get all wound up yet. There's a lot of miles and a lot of conversation and a lot of deliberation that still has to take place in the Senate, and I'm sure they'll send something back to the House, and then the House will then agree, and then they'll move forward.
But let's keep the long-term view in mind and be calm and collected and allow time to provide what's really on the table, so that we can then control the things that we can control. Don't forget to subscribe, rate, and review, and go to AristaWealth.com to get other videos, tools, tips, and resources to help you live a life of significance.