Episode 62: Joe Biden’s Tax Plan

Description:

Joe Biden plans to substantially change the tax code if elected. Garrett Watson from the Tax Foundation joins Tom with analysis of Biden’s plan. This is a must-listen show for all business owners, estate planners and investors.

SHOW NOTES:

05:15 – How Does Biden Plan To Change The Tax Code?

09:07 – How Will Raising Tax Rates Impact The Economy?

10:07 – What Is The Ideal Corporate Tax Rate?

12:58 – How Will The Elimination Of Tax Incentives Impact The Economy?

20:56 – How Will Biden Change Estate Planning?

28:20 – What Does The Tax Foundation Support In Biden’s Plan?

32:18 – Why Does Biden’s Tax Plan Not Address The Federal Deficit?

Transcript

Announcer:

This is The WealthAbility® Show with Tom Wheelwright; way more money, way less taxes.

 

Tom Wheelwright:

Welcome to The WealthAbility® Show, where we’re always discovering how to make way more money and pay way less taxes. This is Tom Wheelwright, your host, founder, and CEO of WealthAbility®. So in the news right now, big deal is Joe Biden’s new tax plan. And I have been dying, I mean, literally dying for this podcast because what I want to make sure everybody knows is what does this really mean? What would happen if Joe Biden got everything he wanted? Okay and I’m not anti Joe Biden, I’m not, I think he’s a nice guy. What does this tax plan actually mean? What does it mean from a personal standpoint, but frankly, what does it mean from an economic standpoint? So today we have a very special guest. I am very excited to have an expert from the Tax Foundation, which I think is the best think tank on taxes in the world, okay, certainly in the United States.

And they’re very objective. I find them to be very objective. I find them to be very thorough and I’m very excited about this because when we make a decision on a vote and we never have a bigger role than we have in November, right? When we make a decision on a vote like we have in November, we need to make sure that we’re really understanding the facts, not just what the media tells us or not just what one or the other candidate tells us. So I’m not really looking at this from a what’s right and what’s wrong, or what’s good and what’s bad. What I want to do today is let’s discover really what this Joe Biden’s tax policy would mean to America. What would it mean to you personally? And what would it mean to America economically? And so we have with us Garrett Watson, who’s a Senior Policy Analyst at the Tax Foundation. Welcome Garrett, if you would just give us a little bit about your background and a little bit about the Tax Foundation, if you would?

 

Garrett Watson:

For sure. Thanks Tom, for having me on. I’m excited to speak with you today about this important topic. My name is Garrett Watson. I work at the Tax Foundation on federal and state tax policy. And I’ve been working here for about two years now. And the Tax Foundation focuses on how to improve tax policy and educate taxpayers, policy makers and the media at the state, federal and global levels. We really try to focus on how to make tax policy work, to raise the revenue that we need to fund government services, but do so in an efficient and smart way and steer folks away from what might be ineffective ways of doing that, so that we can maximize economic growth and opportunity for Americans. And of course that is a particularly important today, given all the different ideas out there about how to perform our taxes to moving forward.

 

Tom Wheelwright:

Oh, awesome. Thank you, Garrett. So our listeners all know because they listen to me on a fairly regular basis that as why I explained the tax law and you and I had this discussion earlier. I see the tax laws as primarily a series of incentives. I mean, most of the tax law whether it’s incentives for natural energy as well as a clean energy, whether it’s incentives for sending your kids to school, incentives to buy a house, now we have incentives to live in a particular state. Okay, we have incentives for buying a particular type of car even. So all of these are incentives. Fundamentally we know people hate paying taxes. I had a Morris Pearl and he was talking about how millionaires need to pay more tax but also understand that the tax law is really fundamentally incentives.

 

And so the question is, if you’re going to raise more money, do you raise rates or do you change the incentives? Because I think those are two very different things. So that’s the fundamentals of where wealth ability comes from. As I explained to you, Garrett, I’m a tax guy, I’ve been involved in tax for 40 years, including three years in the National Office, [inaudible] when Reagan was president, including time with the Fortune 500 company. So I’m very practical about it, but I’m alsO a big believer in looking at policy and really is it good or bad, but evaluate what does the policy do? Okay, what does it actually do from a practical standpoint? So if you could Garrett for our listeners, would you outline what you see as the major tenants of Biden’s tax plan?

 

Garrett Watson:

Sure. I’ll be happy to do so. Of course, this is an interesting time in tax policy because a few years ago we did undergo a pretty big set of tax reforms in late 2017, that did change taxes dramatically. And a lot of the discussion in tax policy since then has been what are the ramifications of those changes and whether or not they should stay because over the next five to 10 years a lot of those tax changes. Some of them being the rate cuts others being the structural changes you just mentioned in the tax code are going to be phasing out or going away. And that really does set up a lot of the motivation of Biden’s tax plan, which is trying to get at or criticizing some of those tax changes. We saw forced tax cuts for individuals. We saw corporate tax rate in 2017 go from 35% down to 21%.

 

We saw some structural changes in our international tax system. And so a one major change that Joe Biden is advocating for is to start repealing some of these tax changes, particularly for higher earners above about $400,000. So he would start rolling back the top tax rates that are lower now for those individuals. Or you’d like to see the corporate income tax rate go up from 21% to 28%. He would also like to make some changes above and beyond repealing some of those tax changes from ’17. Two of which I’d highlight, one is a minimum tax on corporations because he thinks that they have not paid enough in tax. And the second major change is in the treatment of capital gains and investment income, where you see much higher rates on that income and structurally that might try to raise more revenue.

 

Overall, his tax plan of everything was enacted but raise about $3 trillion over 10 years. And just to give you a sense of comparison to Hillary Clinton’s tax plan in 2016, that added up to about $1 trillion. So it is a pretty large increase in revenue. And it’s overall a pretty progressive in that it’s focusing in on those higher earners to get that revenue though, there are going to be second order economic effects for everyone and happy to chat more about that too.

 

Tom Wheelwright:

So let’s talk about that. So to me, I break down Biden’s tax plan into two different pieces, right? One is raising rates, which I don’t think there’s very many people that are going to say raising the rate from 37% to 39.6% is going to make much difference to people who are in that tax bracket. And I don’t think it’s going to change their incentive or anything like that. And interesting, back when I was going through my Masters of Tax Program at the University of Texas, one of my professors said, “40% of magic number that people tend to pay more attention when the rates or 40% to reducing their taxes than they do under 40%.” Do you find that, that’s true?

 

Garrett Watson:

I think there is a psychological barrier there for sure. And of course it would go up above where it was before the Tax Cuts and Jobs Act. So that’s another change where you would see it go back beyond where it was over a decade ago. So there’s a change there too in terms of how useD people are to those kinds of tax rates.

 

Tom Wheelwright:

No, that’s a good point. So, but when you talk about changing tax rates, that’s one thing or adding in that another tax bracket, a tax bracket over a million dollars like Hillary Clinton proposed, right? She proposed that 4% surtax over a certain level or adding another tax rate or 5 million or something like that. My sense of that is from an impact on the economy. I don’t think that would… My sense is that would not have a huge impact negatively on the economy and on how people behave. What do you think about…? Let’s start with just raising tax rates.

 

Garrett Watson:

I think your intuition is right, especially on the individual side that the changes on tax rates there don’t have… They do have a negative economic impact but it’s not particularly large. Where we see the larger negative economic impacts overall in the plan are on the more structural changes you highlight here, like this minimum tax that might create a lot of complexity for firms that are trying to earn profits. And the second area is in raising the corporate tax rate, just because that does have a direct impact on investment in the United States from a competitiveness perspective internationally. But that’s really I think the biggest place where a rate change matters economically, a lot of the other negative economic effects you suggest are more structural in nature.

 

Tom Wheelwright:

Got it. So, I’m just curious. I’ve been dying to talk to you guys, the Tax Foundation, where do you think the corporate tax rates should be? I mean, is 21% too low, is 28% too high. In a perfect world, where would you set the corporate tax rate?

 

Garrett Watson:

We have been big advocates of the 21% corporate tax rate, mostly because statutory and effective corporate tax rate for the last couple of decades have been lower across the world and we do need to emphasize our competitiveness from a domestic investment perspective. Though, of course, while the corporate tax rates is important, other aspects of the tax code that drive investment are also really important too. So we can’t have too much of a focus now that that rate is down on the corporate rate. We also need to think about items like you mentioned earlier, such as depreciation rules and full expensing. Those issues are sort of arcane and sometimes it can be challenging to understand, but they’re just as important in terms of driving investment in the United States. So a lot of our focus right now on longer-term tax policy changes to make structural changes that are going to incentivize growth much like the reduction of the corporate income tax rate was. The challenge of course is education so that folks can understand what their structural change might entail.

 

Tom Wheelwright:

Got it. All right, so that’s the rate changes. My sense is corporate tax rate should either be 25% or 15%. That’s my own perspective because I think 15% where a tax haven and you just drive massive investment here and at 25% we’re competitive. Okay, so we’re not a tax haven, but we’re still competitive, 28% we’re too close to everybody else. That’s just my opinion. But let’s talk about the other side, because I actually think that the rate hikes are really a minor part of this when it comes to the additional tax brackets or the raising the corporate rate. To me, the bigger changes are what you were talking about when it comes to the incentives that are in the tax law, right? Rates are not incentives, rates are rates, but incentives include bonus depreciation or even accelerated depreciate includes the 1031 exchange rules, which is the ability to sell a piece of real estate without paying tax when you sell the real estate, as long as you keep the money invested in other real estate, right?

 

And then there’s some incentives actually, I think when Biden talks about his capital gains rate over a million dollars. I think that that’s also an issue that we ought to talk about. But let’s save that for part three here. Let’s start with the… Really, a lot of the fundamental incentives, intangible drilling costs which is basically the oil and gas incentive which he wants to get rid of, the bonus depreciation which he wants to get rid of and the county exchange that he wants to get rid of. Let’s say he got his wishlist and you eliminate all those incentives, what do you think is the impact of that from an economic standpoint, ignore the tax side, but just how does that change how the economy functions?

 

Garrett Watson:

Yeah, that’s a great question. And I do think that removing, especially removing or not extending the depreciation changes that we saw in the head Tax Cuts and Jobs Act would be one of the biggest effects economically. What we find in our various modeling is that a full expensing of assets so allowing businesses to fully deduct the cost that they incur of investment is a big driver and incentive, as you say, to invest more in the United States. And there’s going to be, I think, a debate as those provisions phase out or Biden goes ahead and advocates for outright repeal ahead of time about what the economic effects will be, especially when we think about driving a robust recovery coming out of this pandemic and economic crisis, which I think has added an additional layer in there.

 

And you raise another good point that there are a raft of smaller tax provisions, some of which makes sense, others which don’t that drive either social policy, incentives that we want to give to individuals or to businesses. And there are variety of those that the former vice president is advocating for changing, including incentives for green energy investment that might be disruptive economically if there’s non neutrality in the tax code there. And of course, some other effects in the real estate industry, he has been very specific about the changes to kind of changes, though he seems to hint that, that might be an area to raise revenue. And all these industries overall going to be dealing with recovering from the coronavirus crisis. And so it is important that we think smartly about maybe thinking differently about adding in more preferences in the tax code, and instead focusing on provisions that will extend longterm growth across the entire economy.

 

Tom Wheelwright:

Well, here’s my fundamental question, Garrett. So the economy has gotten used to certain things. The economy has gotten used to [inaudible] elections they’ve been around forever. One of the early tax incentives was the deduction for intangible drilling costs, which in layman terms is basically for every dollar you invest in an oil well, you get an 80 cent deduction. That’s basically to put that simply that the economy is used to that. Okay, they’re used to these incentives. What happens… When I look at Biden’s tax plan, it seems to me like, it’s basically, he seems to be saying, “Well, these are just benefits to the rich, which I don’t look at them that way. I mean, do they mostly benefit the rich? Yeah, because they’re the ones who invest the money, right?

 

But I don’t think it’s… And they’re the ones with the high tax rates, right? So it makes sense for them to invest. But what happens when you basically change the fundamental underpinnings of the tax law so that those incentives that people have gotten used to that have actually priced into asset prices in the economy, what happens to those asset prices when those incentives come out. Let’s say Biden got all of those and basically you broaden the tax base by getting into those incentives. What is the impact on the economy in the short run?

 

Garrett Watson:            Yeah. You raised a good point that investment decisions are driven by some certainty. And a big part of that of course is what tax burdens they’ll be. So if a business or a firm is using… As making an investment decision in part, because of the way the tax code is treating a given investment. Going ahead and altering or removing that in the tax incentive can be disruptive for not just that investment, but also the expectations that business owners have moving forward about their future investment. And that’s what’s pernicious about some of the phase outs the Tax Cuts and Jobs Act is it’s really unclear whether or not these tax provisions will be extended or not. And it creates a lot of uncertainty about whether or not it makes sense to invest in a given location and a in given opportunity.

 

And so providing longterm certainty about what the tax law is going to be is really important. We have debates about whether or not a given provision makes sense, whether or not we should remove it and broaden the tax space to raise more revenue. Maybe that’ll be more efficient, but either way on that question, having either temporary tax policy or policy that’s in question depending on which administration is in the White House or who controls Congress, really does create uncertainty in investment decisions, especially in an economic climate like we have today.

 

Tom Wheelwright:        I’ll get back to this in a second. Hey, if you like financial education the way I do, you’re going to love Buck Joffrey’s podcast. Buck’s a friend of mine, he’s a client of mine, he’s a former board certified surgeon and he’s turned into a real estate professional. So he has this podcast that is geared towards high paid professionals, that’s who he’s geared towards. So if you’re a high paid professional, you’re going look, “I’d like to do something different with my money than what I’m doing. I’d like to get financially educated. I’d like to take control of my money and my life and my taxes.” I would love to recommend Buck Joffrey’s podcast, which is called Wealth Formula Podcast with Buck Joffrey. I hope you joined Buck on this adventure of a lifetime.

 

Historically we started with tax incentives. A lot of the investment type incentives started back in the ’60s, right? With the investment tax credit, the first big foray into a tax incentive for investing in business and investment tax credit. And then we got the intangible drilling costs and then Reagan brought in accelerated depreciation on real estate, right? That was his contribution to that. But it seems like there’s been a very consistent move towards using the tax law to impact the economy, to actually encourage certainly activities so that the government got people to do what the government wanted them to do.

 

And what it seems like to me that [inaudible] is removing a lot of that and to me that you’re changing basically 50, 60 years of policy and you’re saying, “No, we’re going to stop using it that way.” It would be no different than frankly if you went to a flat tax, right? I mean, it’s the same kind of idea. You’re brightening the base and you’re getting rid of these incentives, but isn’t there a short term, I mean, a fairly significant upheaval in the economy if you do that?

 

Garrett Watson:            There definitely would be a disruption, even tax codes that changes that might be for the better if we’re going to create disruption. And so you have to be very smart about how the phases work and the expectations that business owners have so that they can have more planning. That I think is really the tricky work of tax policy is making sure even if a given policy change makes sense that it’s not going to have unintended consequences that might cause some disruption there. And so having phased ends, making it very clear what the policy is and making sure you’re getting the tax base right. Because you do want to make sure, even if it’s an incentive that drives investment for a given industry, that that’s not having either unintended consequences or is actually part of the right tax space. So we can raise the revenue that we need and so providing that certainty is very important.

 

Tom Wheelwright:        Yeah. I actually thought when I was watching the Democratic primaries, I was watching all of them saying, “Well, we’re going to undo the corporate tax rate.” Well, that’s certainly makes companies from overseas want to invest in the US when you have an entire 50%, basically of the electorates saying, “We don’t want this corporate tax policy.” To me, it seems like, that by itself is disruptive.

 

Garrett Watson:            Mm-hmm (affirmative). And here is an important thing to consider is when you think about a tax policy change in isolation, it might make sense or it might seem like just a small change, right? Just a rate change here and there or one preference eliminated. But you’ve got to look at these tax plans in totality, because when you add up the effect of tax burdens all these different tax changes, it may actually be a very large difference in the economy and incentives people face, if they’re facing very high combined tax rates or structure that doesn’t incentivize investment or additional work.

 

Tom Wheelwright:        Let’s talk about another. So I think it’s a really big change that Biden is proposing is, and I’m going to look at these in combination, is the lowering of the estate tax exclusion to three and a half million dollars. And then the addition of ordinary income tax rates, in fact, doubling the tax rate on capital gains after a million dollars. Okay, I actually see those together because our listeners primarily small business owners, they’re entrepreneurs and they spend their lives building a business. Okay, and so, you know what? We effectively have a $23 million exclusion makes it really easy because I don’t have to think about it. I can pass it on to my child, if my child wants the business or I can keep it or sell or whatever.

 

Basically a state taxes don’t have an impact on most small business owners. Okay, some of them they do, they do the planning, but for most of them they’re not going to. But at a three and a half million dollars, they’ll do, right? Because three and a half million dollars you think of it as a lot of money, but when it’s a lifetime worth of work or you’re talking about the value of a business somebody has built, it’s not that big of a dollar. Okay, it’s not that big of a threshold. So he’s talked about both reducing the exclusion and he’s talked about also eliminating the basis step up, which basically really benefits I think more of the less wealthy people than it does to more wealthy people.

 

The base of step up, just because the less wealthy people it’s their stocks, it’s their businesses, it’s their farms, the family type businesses that benefit so greatly from these basis step ups, meaning you basically eliminate the capital gains tax. So first question for you, Garrett, is can you give us an idea of proportionally how much money would that provision of lowering the estate tax exclusion, how much actual dollars does that raise?

 

Garrett Watson:

So the change in the estate tax while it would raise revenue would not be a large driver of the revenue that the former vice president would raise in his plan. It does seem like a lot of the motivation for the state tax change. And to some extent the capital gains changes is this broader battle that folks on that side of things have against either they’re concerned about rising wealth and income inequality. And that there’s a fairness issue as it relates to the tax treatment of estates and, or appreciate an asset that are subject to step up in basis. And the tricky thing of course is that there’s interesting questions about fairness there. But we also have to balance that with the fact that small businesses and startups are some of the biggest drivers of net job creation in this country.

 

And that we are facing right now, even before this pandemic, a crisis of creating new businesses and innovation and economic dynamism. And the last thing we want to do and we want to be very careful about, is penalizing small business owners and entrepreneurs who are trying to pass their success and their investments onto their children, onto whoever who’s inheriting it too much. Because that could dampen what already is a declining amount of innovation and dynamism in this country. And so that’s, I think a second issue that’s important to think about not just the rates, but what is this going to do about our broader innovative culture.

 

Tom Wheelwright:

Right. So let me run a scenario by you and see what you think. So let’s say that you have a small business that is worth $5 million when somebody dies. Okay, that small business now is subject to estate tax. Okay. So in order to pay the estate tax, typically a small business doesn’t hang on, than have a lot of cash in the bank. So they’re not just going to be able to go out and get the money or borrow the money or anything like that, chances are they have to sell the business. Okay. So now you sold the business, but because you have no basis step up, now you have a capital gains tax, but you have a capital gains tax because remember, I mean, most people that start a small business they’ve started from scratch. So if they sell it for $5 million, they’ve got $5 million of gain, right?

 

I mean, that’s the reality. Most businesses have very little basis so that really $5 million of gain when they sell the business. So you sell the business for $5 million because you’re over the million dollars, right? Which is Biden’s level for the ordinary income tax. Okay, let’s say that’s the only tax though, that’s the only gain you got $4 million is going to be taxed at, let’s say it’s 40%, okay, plus state taxes. So let’s make it 50%, make a nice even number. So that means that you’re starting out where you sold it and you only have $3 million. Now, you’re going to pay a state tax of another 40%, not on the 3 million, but on the 5 million or at least on the million and a half. But let’s say it’s on the whole 5 million. Okay. A 40% tax on 5 million, that’s another 2 million.

 

So basically what you’re saying is, is that the government comes in and takes 80% potentially. Now, hopefully that’s not the way they’d actually do it, but potentially 80% of a small business. Why would anybody ever think about passing on a small business to their son or daughter? To me, it spells the end of the family farm that goes from generation to generation, the business that goes from generation to generation. You love your local restaurant, well, kiss it goodbye when the owners die, right? Because it’s gone.

 

Garrett Watson:

Yeah. That’s right. And that’s a great example of the additive nature of various taxes where, Oh, you’re just paying the small amount. But when you think about a state tax on top of income tax on top of state tax eliminating step up, you do have a pretty high effective tax burden. And then on top of just the paying, it is a very complex provision to comply with. It’s a complete nightmare, anyone who has had to deal with the estate tax knows of that. And of course it also deals with… You have a lot of planning opportunities there. And it creates a bunch of hassle for folks who are looking to avoid it and additional work that they need to do, that they wouldn’t be under… That they could put their effort toward in their business, they didn’t have to deal with that.

 

And so overall it’s not even well-designed for the goal that it’s trying to achieve. And so that’s part of the motivation of what happened to the Tax Cut and Jobs Act is, let’s reduce the number of estates that have to deal with this. So we don’t have this big compliance burden and disincentive that’s hitting our [crosstalk 00:27:37].

 

Tom Wheelwright:

Yeah, we would actually refer to the Biden’s plan as the Accountant’s Full Employment Act. So it wouldn’t be because you’d have all… I mean, if you have an 80% potential tax liability, that’s an enormous incentive to do tax planning. I mean, enormous incentive. So, I mean, I’ll be busy till the day I die with that kind of a plan. So, from a selfish standpoint, be good for me, right? Bad for my clients, but good for me. So what would you do? I’m going to go into, okay, what’s good tax policy just for a minute here and then we’ll wrap up. What do you think does need to change from a tax policy standpoint? And are there any of Biden’s proposal you go, “These are okay.”

 

Garrett Watson:

Those are good questions and we’ve been exploring what makes sense for not just the short run, we’ve been so focused on liquidity measures and the various stimulus bills coming out of Congress for the last few months. But thinking about what would longer-term tax policy look like? And one of the top things which I just mentioned before that we would like to see is permanence on full expensing of assets of businesses, can I get the full value of their investment from a tax perspective? That’s really important and we find that to be a pretty big driver of growth in the long run. And another thing that we’ve looked at a bit of course is adjusting the tax code so that it can serve new economy businesses as well and gig economy workers, the tax code that’s really outdated as it relates to a lot of that, it’s a big compliance drags.

 

So we’d like to see some simplification there and to go back to some of your points, I think revisiting some of the tax expenditures and elements of the tax code that is driving social policy and getting out of the tax code will be really important. If we do have incentives we want to provide, we can do that outside of the tax code and in many areas. And that could not only raise revenue, but also simplified it a lot. So finding areas of simplification which unfortunately with the Tax Cuts and Jobs Act while we reduced rates, we didn’t simplify the code all that much, in some areas we actually made it more complicated.

 

Tom Wheelwright:

Yeah. Speaking of social policy, earned income credit would be a good example, right? Of a very complex computation that really affects the people with the least ability to make the computation in the first place, right?

 

Garrett Watson:

Mm-hmm (affirmative).

 

Tom Wheelwright:

And has been a subject of a lot of scams and fraud, frankly, it’s something that the IRS has really had to work hard at because the IRS systems obviously are a little behind the times. And so that’s the type of thing you’re talking about, right? Is let’s simplify things, let’s do things outside of the tax law that aren’t really don’t need to be in the tax law because they’re not incentives to do something, they’re really just a reward for being something.

 

Garrett Watson:

Right. That, and another great example of course is the giant extenders package, which happens at the end of every [crosstalk] next policy often applying to pass tax years. That’s not even human behaviors [inaudible 00:30:26]. Those are the kinds of things we could be working on.

 

Tom Wheelwright:

Awesome. Any last words that you’d like to share with voters who are looking at… Okay, if tax policy is important, frankly, I think tax policy is important to everybody because I’ve never yet met anybody who said, “I want to pay more tax.” I mean, I’ve actually asked people, I said, “Well, if you want to pay more tax, do you know that there’s a box you can check and you can actually voluntarily pay more tax.” And they say, “Yeah, but I don’t want to pay more taxes, not everybody’s paying more tax.” Okay, but if nobody likes paying tax, all right, then what do we do from a tax policy standpoint? Or what should we be doing individually when we’re looking at the November election when it comes to this narrow area of tax law?

 

Garrett Watson:

Yeah, I think there is a pretty broad difference in vision between both of those are competing plans that we’re seeing a shape up. We’re hoping to see more details out, of course, the White House on their potential, a plan that hinted at some things. But we’ll have to see and very much have to take all this in the context of, I think the economic recovery that we’re hoping fingers crossed. We’ll be seeing later this year and next year and the impact that these tax plans will have. And of course we have to always situate these tax ideas in the context of the spending side and the competing visions that policy makers may have on that end of things.

 

As well as we have to mention, of course, our growing debts and deficits, we’re now running structural deficits moving forward, pretty unprecedented amount of debt. And we’re going to have to find a way to either cut spending or raise revenue to eventually address that, even if not in the short run to address the immediate crisis. And so it’s going to be a difficult time for policy makers and we got to keep all that in mind when weighing the trade-offs of how we raise a tax revenue to address our debt and any additional government services that we want to provide.

 

Tom Wheelwright:

I found it pretty interesting when you said that Biden’s tax plan of all, everything’s implemented raises $3 trillion over 10 years, and they’re talking about a $3 trillion single bill.

 

Garrett Watson:

That’s right. Exactly. And-

 

Tom Wheelwright:

And nothing in Biden’s tax plan, I don’t think any of the money goes to the deficit, right? It all goes towards other programs, right? So he’s talking about raising spending equal to the raise in the revenue. So the deficit just keeps growing.

 

Garrett Watson:

That’s right. And that’s going to be one of the main challenges is how to address that in a way that’s sustainable. And unfortunately, just going toward raising taxes on hire owners is not going to cover it realistically. And that’s not how other countries have done it either, for example, in Europe. So we have our work cut out for us on that side of things.

 

Tom Wheelwright:

Yeah, that’s for sure. So Garrett Watson, Senior Policy Analyst of the Tax Foundation, where do we go for more information from the Tax Foundation?

 

Garrett Watson:

For more educational material and analysis on everything that’s going on in tax world these days, feel free to visit taxfoundation.org.

 

Tom Wheelwright:

Thank you, Garrett. Thanks everyone for listening and watching. The thing to remember is tax policy doesn’t just drive revenue to the government. Tax policy is about how people behave. And one of the things I’ve loved about the Tax Foundation over the years is that they do what they call a dynamic scoring, which means when they look at how much revenue is raised, they’ll looking at how people’s behaviors change. And that’s very important because people’s behaviors will change because people hate paying taxes. So what’s important is as we understand what goes on in the tax laws, we understand what these plans are.

 

Then we can start looking at, okay, how does that affect me? What can I do personally from my own economy because we can vote. But other than that, we don’t have a whole huge impact on government policy, but we can vote and we can vote with our dollars. And we can also do something about it with our own economy because when you do, when you get this education, like you’ve gotten from Garrett and the Tax Foundation this morning, you’ll always make way more money and pay way less tax. Will see you next time.

 

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You’ve been listening to The WealthAbility® Show with Tom Wheelwright; way more money, way less taxes. To learn more, go to wealthability.com.

More Episodes
Episode 68 – Safeguard Your Wealth
Episode 68: Safeguarding Your Wealth Using Bitcoin 💰 Description: Discover how Bitcoin may be an emerging safe haven for protecting your wealth....
Investing for High Income Earners
Episode 67 – Investing For High-Income Earners
Episode 67: Investing For High-Income EarnersDescription: Busy professionals work for their money. But what happens when you stop working or are...
Trumps Taxes - Is it legal to pay $0 in taxes
Episode 66 – Trump’s Taxes
Episode 66: Trumps TaxesDescription: The N.Y. Times reports that Donald Trump recently paid $750 in federal taxes. Discover how it’s possible for...
How We Will Pay The COVID Debts
Episode 65 – How We’ll Pay The COVID Debts
Episode 65: How We’ll Pay The COVID DebtsDescription: Discover how cities plan to pay for the COVID crisis. Tom speaks with a city councilman from...
David Stockman - COVID Debt
Episode 64 -The Impact Of COVID Debt
Episode 64: The Impact Of COVID DebtDescription: Governments around the world have printed massive amounts of money in response to the COVID crisis...
Income Inequality - Can it be solved
Episode 63 – How To Solve Income Inequality
Episode 63: How To Solve Income Inequality Description: Discover why wealth inequality is a bigger problem than income inequality. Annamaria Lusardi...
Joe Biden's Tax Plan
Episode 62 – Joe Biden’s Tax Plan
Episode 62: Joe Biden's Tax Plan Description: Joe Biden plans to substantially change the tax code if elected. Garrett Watson from the Tax...
Should The Wealthy Pay for COVID - Morris Pearl
Episode 61 – Should The Wealthy Pay For COVID?
Episode 61: Should The Wealthy Pay For COVID? Description: The bill for the COVID crisis will eventually come due.  Many politicians believe the...
Take Command of Your Taxes During COVID
Episode 60 – Take Command Of Your Taxes During COVID
Episode 60: Take Command Of Your Taxes During COVID Description: The extended tax deadline is fast approaching. Discover how the COVID crisis has...
Navigating China's Supply Chain
Episode 59 – Navigating China’s Supply Chain
Episode 59: Navigating China’s Supply Chain Description: Discover how China impacts your personal economy. Whether it’s the supply chain or trade...
Press Releases
WealthAbility Blog
WealthAbility® promotes Clinton Potter to Director of Digital Technology
PRESS RELEASE PR Newswire TEMPE, Ariz., Sept. 27, 2019 /PRNewswire-PRWeb/ -- Leading financial education company WealthAbility® announces Clinton...
WealthAbility Blog
CPA Tom Wheelwright Clarifies 9 Big Picture Tax Changes Impacting 2018 Returns
TEMPE, Ariz., Dec. 19, 2018 /PRNewswire-PRWeb/ To help taxpayers save money and reduce mass confusion, Tax-Free Wealth Author, CPA and CEO Tom...
WealthAbility Blog
CPA Tom Wheelwright Releases 12 Year-End Tax Planning Questions for 2018
TEMPE, ARIZ. (PRWEB) SEPTEMBER 17, 2018 Tax-Free Wealth Author, CPA and CEO Tom Wheelwright announces 12 Year-End Tax Planning Questions...
WealthAbility Blog
CPA Tom Wheelwright releases Tax-Free Wealth 2nd Edition with New Tax Law Updates
TEMPE, Ariz., Aug. 16, 2018 /PRNewswire/ Bestselling Author, CPA and CEO Tom Wheelwright announces the new release of Tax-Free Wealth...
WealthAbility Blog
CPA Tom Wheelwright Uncovers 6 ‘Wayfair’ Supreme Court Decision Impacts on Retailers
TEMPE, Ariz., July 25, 2018 /PRNewswire-PRWeb/ --    CPA, CEO and Tax-Free Wealth Author Tom Wheelwright announces six major impacts of the South...
WealthAbility Blog
CPA and Tax Expert Tom Wheelwright Uncovers 5 Last Minute Tax Tips for Your 2017 Returns
With millions preparing tax returns in the U.S., CPA, CEO and Tax-Free Wealth Author Tom Wheelwright reveals five last minute tax tips...
WealthAbility Blog
Announcing WealthAbility!
Global Tax and Wealth Expert Tom Wheelwright Launches WealthAbility with Tax-Free Wealth Network™ of CPAs SUMMARY CPA, CEO and Tax-Free Wealth...