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Biden’s Tax Proposals

Biden’s Tax Proposals

As we are nearing the election in November, we are starting to receive more details on some of the policies that likely Democratic presidential nominee Joe Biden is proposing.  His stances on taxes have begun to take center stage over the past couple of weeks.  Here are some of the details that Joe Biden is proposing.


Individual Tax Rates:

For those making $400,000 or more the top tax rate will be increased from 37% to 39.6%.

12.4% Social Security payroll tax on wage income over $400,000 (currently capped at $137,700). Tax would be split between employer and employee.

President Trump is looking to lower taxes on the middle class by 10%. This could effect those in the 22% or 24% brackets.

Capital Gains:

Increase top long-term capital gain and qualified dividend tax rate to 43.4% (ordinary income tax rate plus healthcare surtax) for income above $1 million. Today the top capital gains tax rate is 20% with a 3.8% net investment income tax.

The net investment income tax remains the same.




Biden is looking to limit total itemized deductions so the reduction in tax liability per dollar of deduction does not exceed 28%, which means taxpayers in tax brackets higher than 28% will face limited itemized deductions.

President Trump is looking to keep the standard deduction amounts the same at $12,400 per individual and $28,800 for married filing jointly.  

Biden is also looking to phase out the 20 percent pass-through deduction for income over $400,000.

Corporate Tax

Presidential candidate Joe Biden is looking to raise the corporate tax rate from 21% up to 28%.  Keep in mind that most corporations pay double taxation due to being taxed at the corporate level and then again at their personal level.  

Biden is also looking at establishing a 15% minimum corporate tax rate for companies reporting a net income over $100 million. Currently, no minimum tax is imposed on companies.


Estate Taxes

Biden is also looking to remove the stepped up basis provision for stock that is inherited by beneficiaries. This means that instead of removing the capital gains the owner of the stock would either have to pay the capital gains or that burden will then be passed the the beneficiaries.

The second shift would be to the exemption amounts on estates. Biden is proposing moving the exemption amount down to $3.5Million and bump the estate tax rate up to 55%.  This would be an increase from the exemption amount of $11,580,000.


There are several other changes that Biden is proposing that he has provided less detail on. He has also suggested raising taxes on wealthy especially around investment income. He also mentioned the possibility of getting rid of the 1031 Exchange for capital gains in real estate.


If you would like to schedule a call or zoom meeting to discuss what these changes could mean to your situation. Click Here





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Big Tech Plows Forward

Big Tech Plows Forward

On Wednesday, 4 of the most powerful CEO’s in the tech industry spent five and a half hours testifying in front of Congress. CEO’s from Google, Apple, Facebook and Amazon were questioned by Congress.  The reason they were called before Congress is to address accusations that these four companies are stifling innovation and crushing their competitors before they even have a chance to compete.  The chairman of the anti trust panel, Rep. David N. Cicilline (D-R.I.) accused these companies of creating monopolies in their industries and drew comparison to John D. Rockefeller and Andrew Carnegie.  They called out the CEO’s for acquisitions they have made throughout the years to eliminate competitors. This may not be the end of these hearings for the tech companies as they may be called back to testify again on a future date. 

With this backdrop the big tech companies reported earnings Thursday after the market close.  The earnings reports for Apple, Amazon and Facebook smashed estimates and each stock in premarket trading are up 5% or more.  The success of Amazon was strongly on display last quarter as the company grew both sales and profit. The 5 largest tech stocks now make up around 25% of the S&P 500.  This is why many analysts refer to the market as being heavily concentrated with big tech carrying the overall market.  Here is a chart of how these stocks have performed against that benchmark since last year.

After the bell today, Amazon beat the top line expectations by $8 billion, and Apple reported its highest third quarter revenue ever, growing 11% y/o/y. The fundamentals are justifying their massive growth.

Apple Stock Split

During the earnings call the board of directors at Apple approved a 4-1 stock split.  That means that for every share of Apple stock that an investor owns they will receive 3 more additional shares.  The stock price before the market open is trading above $400 that means that the new price of the stock will trade around $100.  Share holders can expect to see these changes in their account on August 31st.


To discuss what this could mean for your portfolio or a review of your investments Click Here





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Social Security Spousal Benefits

Social Security Spousal Benefits

Spousal benefits for Social Security is a complicated issue and can lead to the potential of leaving some money on the table.  Recently I hosted a webinar with BlackRock’s Michael Graci and we went over the topic of Social Security, how it works and what it means to you and your spouse.  Here are a few key items to know about Spousal Benefits for Social Security.


  1. A spousal benefit is equal to 50% of their partner’s Primary Insurance Amount (PIA) once they themselves reach their Full Retirement Age (FRA).
  2. When a spouse collects their spousal benefit can impact the total they take home. If a spouse collects spousal benefits before FRA, their spousal benefits will be reduced (please note that collecting five years early results in a 35% lower benefit). On the other hand, your spouse is not rewarded for waiting beyond FRA. Spousal benefits do not receive delayed retirement credits, so there’s no incentive to wait to collect a spousal benefit beyond full retirement age.
  3. One spouse must file for their benefit in order for the other spouse to be eligible to collect a spousal benefit.  So if they are both the same age and  one spouse waits until 70 to file and collect, the other spouse must wait until 70 to collect the spousal benefit.
  4. Individual benefits and Spousal benefits are netted against one another.  Your spouse will get the greater of 50% of your benefit or their own benefit.

The picture above shows the example of a husband and wife. Jordan has a Full Retirement Age benefit amount of $2,200, therefore if his wife Alex waits until age 66 and claims when Jordan claims she will get half of his benefit or $1,100. 

It is also important to note that when a spouse claims their spousal benefit determines what amount of benefit they will receive. If Jordan were to claim his Social Security benefit at age 62 and Alex, his wife does the same thing she will received a reduced benefit.  

Lastly it is important to note that if one spouse waits until 70 to claim their benefit this will not increase the benefit amount for their spouse. This benefit will still be based on 50% of their amount at Full Retirement Age. If that is the case it will make sense for the spouse to claim their own benefit, if possible, at Full Retirement Age to at least start receiving some benefit.


If you would like to schedule a call or zoom meeting to discuss what how you and your spouse can optimize your Social Security benefits Click Here





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Webinar: Estate Planning & Asset Protection

Webinar: Estate Planning & Asset Protection

Register Here

What would happen to your accounts if you were to fall ill and incapacitated? Who would be in charge of your financial decisions? Where are you directing your money in case you were to pass away?

Please join us Tuesday July 21st @ 12pm as Estate Planning attorney, Alethea Teh Busken, of Kohnen and Patton will answer those questions and cover other topics around Estate Planning and Asset Protection.  There will also be time for Q&A to cover any questions you may have wanted to ask an estate planner.

Register Here








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