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Biden tax plan

15,946 Views | 126 Replies | Last: 2 yr ago by YouBet
rononeill
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3:06p, 9/1/21
Place your bets- what does he get through?
I'm hoping w the state of the world they need to punt due to reps on the bubble in home districts. I also can't imagine the major contributing constituents will be ok w a retroactive capital gains program. But- they can also make a boogeyman out of the rich to distract from the general ineptitude of the administration.
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Irish 2.0
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In reply to rononeill • 3:13p, 9/1/21
rononeill said:
Place your bets- what does he get through?
I'm hoping w the state of the world they need to punt due to reps on the bubble in home districts. I also can't imagine the major contributing constituents will be ok w a retroactive capital gains program. But- they can also make a boogeyman out of the rich to distract from the general ineptitude of the administration.
Whole lot of self preservation mode is about to go on and I can't see them getting a tax plan through the Senate. Joe Manchin will be working to distance himself from everything Biden
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YouBet
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4:47p, 9/1/21
AG
Hopefully nothing gets through.

I'm holding off on opinion until we get some more signals and trial balloons post Afghanistan.
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Baby Billy
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6:30p, 9/1/21
AG
Taxing UNREALIZED capital gains is the most ridiculous thing I've ever heard of
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YouBet
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In reply to Baby Billy • 6:34p, 9/1/21
AG
ehrmantraut said:
Taxing UNREALIZED capital gains is the most ridiculous thing I've ever heard of
It's insane, however I don't *think* it actually made it any of the 4 plans on the table.

That's not to say dumbass Ron Wyrden who is sponsoring it won't try to slip it in via amendment, because I'm sure he will. However, I have to think all of the financial firms have their heads on a swivel looking for it and will sound the alarm if he does.
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ABATTBQ11
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9:34p, 9/1/21
AG
Biden is done. Democrats had a tenuous majority at best in both houses, but after Afghanistan he's radioactive. A majority of the country think he should resign and that the country is headed in the wrong direction. He's a train wreck right now, and there's no way in Hell dems are going to vote in lockstep on anything remotely controversial to support him or his agenda. It would be a career death sentence to anyone in a purple state or district. They're already likely to lose the House and Senate in 2022, but voting on a tax plan would guarantee it and make the loss even worse. They're going to keep their heads down until next December.
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BenTheGoodAg
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In reply to Baby Billy • 11:13p, 9/1/21
AG
I don't think I heard about this one.

Taking a page out of Enron's book with mark-to-market taxation.
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Sully Dog
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11:51p, 9/1/21
Rasmusen Poll out today said 33% of democrats thought he should resign.
Deplorable Neanderthal Clinger
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2wealfth Man
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11:53p, 9/1/21
AG
Not even sure how you would do this with illiquid assets and real estate? Value is a matter of opinion.
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mazag08
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In reply to 2wealfth Man • 11:59p, 9/1/21
AG
2wealfth Man said:
Not even sure how you would do this with illiquid assets and real estate? Value is a matter of opinion.


The only opinion that matter is the IRS. Sure would suck for you to support wrong think and have what they determine to be sizable unrealized gains.
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Casey TableTennis
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9:33a, 9/2/21
AG
market to market taxation is absurd, and IMO not going to happen. It is akin to a partial (material) nationalization of wealth. Inflation, would become an even more perverse incentive than it is today.
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YouBet
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In reply to BenTheGoodAg • 9:37a, 9/2/21
AG
BenTheGoodAg said:
I don't think I heard about this one.

Taking a page out of Enron's book with mark-to-market taxation.
Ron Wyrden (out of Oregon?) has proposed it for a few years now and Janet Yellen went on record during her confirmation hearing that she supports it as well.

Both are extreme dumbasses.
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Done7
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In reply to Baby Billy • 9:40a, 9/2/21
Does that mean I get a tax deductible for unrealized losses?
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strbrst777
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2:42p, 9/10/21
The plan: Tax Tax Tax Tax Tax Tax...and more Tax.
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gigemhilo
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In reply to Done7 • 11:38a, 9/13/21
AG
Done7 said:
Does that mean I get a tax deductible for unrealized losses?
Prob not lol
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RockOn
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12:42p, 9/13/21
House proposal:
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SubtitleISxS.pdf

https://www.cnbc.com/2021/09/13/house-democrats-propose-new-retirement-plan-rules-for-the-wealthy.html

  • House Democrats proposed several changes to retirement accounts as part of a push to make the tax code more equitable and raise money for their $3.5 trillion budget plan.
  • Among them, the reforms would end "backdoor" and "mega backdoor" Roth strategies for the wealthy and add new rules for individuals with retirement savings over $10 million.
  • The legislation would also disallow IRA investments that require owners to be accredited investors.

Quote:

Accredited investors
Democrats' legislation would disallow IRA investments that require the owner to have a minimum level of assets or income, or to have completed a minimum level of education or obtained a specific license or credential.
This would apply, for example, to accredited investors seeking to buy a private investment.
IRAs with these investments would lose their IRA status meaning they'd lose their tax benefits.
These rules would apply starting in 2022, but there'd be a two-year transition period for IRAs already holding these investments.

This one I think is the most impactful on existing accounts. I wonder what tax bill would be due on Day 1 of it converting to a taxable account.
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mosdefn14
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In reply to RockOn • 12:50p, 9/13/21
AG
RockOn said:
House proposal:

https://www.cnbc.com/2021/09/13/house-democrats-propose-new-retirement-plan-rules-for-the-wealthy.html

  • House Democrats proposed several changes to retirement accounts as part of a push to make the tax code more equitable and raise money for their $3.5 trillion budget plan.
  • Among them, the reforms would end "backdoor" and "mega backdoor" Roth strategies for the wealthy and add new rules for individuals with retirement savings over $10 million.
  • The legislation would also disallow IRA investments that require owners to be accredited investors.

Quote:

Accredited investors
Democrats' legislation would disallow IRA investments that require the owner to have a minimum level of assets or income, or to have completed a minimum level of education or obtained a specific license or credential.
This would apply, for example, to accredited investors seeking to buy a private investment.
IRAs with these investments would lose their IRA status meaning they'd lose their tax benefits.
These rules would apply starting in 2022, but there'd be a two-year transition period for IRAs already holding these investments.

This one I think is the most impactful on existing accounts. I wonder what tax bill would be due on Day 1 of it converting to a taxable account.
Did you miss the part about forced withdrawals of 50% of the amount in qualified accounts above $10mm? So a $15mm IRA has a $2.5mm forced withdrawal?

Also, the part about getting rid of after-tax/excess/top-had 401k contributions? And then no mega-backdoor of that? Any Exxon or AT&T guys in the house? This type of plan is one of the most common for high earning self employed types (doctors, dentists are great candidates).

Don't 100% agree with it, but I understand the forcing money out of Roth's once above $20mm logic.
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RockOn
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In reply to mosdefn14 • 1:08p, 9/13/21
Quote:
...in 2019, 24,990 taxpayers had $5 million to $10 million in traditional or Roth IRAs, and an additional 3,625 had IRA balances above $10 million, including 497 with at least $25 million.
Sorry but there are way more people... with average wealth and income.. that own privately held shares in IRA's. Way more than 3,625.

https://www.law360.com/tax-authority/articles/1407607
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AggiEE
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2:44p, 9/13/21
Better hope this doesn't pass

Lots of harm will be done for those trying to save for retirement that aren't wealthy by getting rid of Backdoor Roth or after tax conversions
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ABATTBQ11
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In reply to RockOn • 2:59p, 9/13/21
AG
RockOn said:
Quote:
...in 2019, 24,990 taxpayers had $5 million to $10 million in traditional or Roth IRAs, and an additional 3,625 had IRA balances above $10 million, including 497 with at least $25 million.
Sorry but there are way more people... with average wealth and income.. that own privately held shares in IRA's. Way more than 3,625.

https://www.law360.com/tax-authority/articles/1407607


But do those people of average wealth and income have IRA balances above $10 million? Not net worth, but IRA balance. That would put their probable net worth somewhere around the $40-$50 million range? I wouldn't call that "average" wealth.

ETA To get north of $10 million in an IRA, you'd need to be maxing out $6000/yr for 40 years and, more importantly, getting way above average returns of 14%-15%. That seems a little incredible.
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RockOn
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In reply to ABATTBQ11 • 3:18p, 9/13/21
ABATTBQ11 said:
RockOn said:
Quote:
...in 2019, 24,990 taxpayers had $5 million to $10 million in traditional or Roth IRAs, and an additional 3,625 had IRA balances above $10 million, including 497 with at least $25 million.
Sorry but there are way more people... with average wealth and income.. that own privately held shares in IRA's. Way more than 3,625.

https://www.law360.com/tax-authority/articles/1407607


But do those people of average wealth and income have IRA balances above $10 million? Not net worth, but IRA balance. That would put their probable net worth somewhere around the $40-$50 million range? I wouldn't call that "average" wealth.

ETA To get north of $10 million in an IRA, you'd need to be maxing out $6000/yr for 40 years and, more importantly, getting way above average returns of 14%-15%. That seems a little incredible.
????????
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AmericanWealth
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3:24p, 9/13/21
We will be doing a full deep dive into the Biden tax plan.

Will cover:

-Changes in Income Tax
-Capital Gains Tax
-How the Government will pursue IRA & 401Ks
-Changes in Estate Taxes
-Changes to 1031 Exchange and Real Estate Investment
-Forced Investment Accounts for Small Business (<5 people)

This is an ever evolving topic as Democrats are sneaking new tax laws into almost any law they pass, including the infrastructure bill.

We look forward to sharing with you soon.
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ABATTBQ11
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In reply to RockOn • 3:37p, 9/13/21
AG
RockOn said:
ABATTBQ11 said:
RockOn said:
Quote:
...in 2019, 24,990 taxpayers had $5 million to $10 million in traditional or Roth IRAs, and an additional 3,625 had IRA balances above $10 million, including 497 with at least $25 million.
Sorry but there are way more people... with average wealth and income.. that own privately held shares in IRA's. Way more than 3,625.

https://www.law360.com/tax-authority/articles/1407607


But do those people of average wealth and income have IRA balances above $10 million? Not net worth, but IRA balance. That would put their probable net worth somewhere around the $40-$50 million range? I wouldn't call that "average" wealth.

ETA To get north of $10 million in an IRA, you'd need to be maxing out $6000/yr for 40 years and, more importantly, getting way above average returns of 14%-15%. That seems a little incredible.
????????


I misread that I think. I was thinking you were conflating those two, but after a re-read I guess you are comparing impact on those with privately held shares versus those with accounts north of $10 million.
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RockOn
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In reply to ABATTBQ11 • 3:46p, 9/13/21
ABATTBQ11 said:
RockOn said:
ABATTBQ11 said:
RockOn said:
Quote:
...in 2019, 24,990 taxpayers had $5 million to $10 million in traditional or Roth IRAs, and an additional 3,625 had IRA balances above $10 million, including 497 with at least $25 million.
Sorry but there are way more people... with average wealth and income.. that own privately held shares in IRA's. Way more than 3,625.

https://www.law360.com/tax-authority/articles/1407607


But do those people of average wealth and income have IRA balances above $10 million? Not net worth, but IRA balance. That would put their probable net worth somewhere around the $40-$50 million range? I wouldn't call that "average" wealth.

ETA To get north of $10 million in an IRA, you'd need to be maxing out $6000/yr for 40 years and, more importantly, getting way above average returns of 14%-15%. That seems a little incredible.
????????


I misread that I think. I was thinking you were conflating those two, but after a re-read I guess you are comparing impact on those with privately held shares versus those with accounts north of $10 million.
Correct. My best-guess would be that the accredited investment provision would hit significantly more people and for significantly more $ than the $10M+ accounts.

I'll be curious to see how they transition those investments out of IRA's if it actually gets passed (which is unlikely)
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ORAggieFan
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In reply to ABATTBQ11 • 3:50p, 9/13/21
ABATTBQ11 said:
RockOn said:
Quote:
...in 2019, 24,990 taxpayers had $5 million to $10 million in traditional or Roth IRAs, and an additional 3,625 had IRA balances above $10 million, including 497 with at least $25 million.
Sorry but there are way more people... with average wealth and income.. that own privately held shares in IRA's. Way more than 3,625.

https://www.law360.com/tax-authority/articles/1407607


But do those people of average wealth and income have IRA balances above $10 million? Not net worth, but IRA balance. That would put their probable net worth somewhere around the $40-$50 million range? I wouldn't call that "average" wealth.

ETA To get north of $10 million in an IRA, you'd need to be maxing out $6000/yr for 40 years and, more importantly, getting way above average returns of 14%-15%. That seems a little incredible.

Most IRA balances are rollover 401k where way more is contributed along with a match. I've contributed $55k/year to mine the last few.
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YouBet
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4:13p, 9/13/21
AG
Recall that the limitations on Roth are partially an outcome of the ProPublica article on Peter Thiel:

https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank
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strbrst777
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8:21p, 9/13/21
"Tax and spend" is out. "Spend and tax" is in. These pols are not good people.
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wangus12
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8:04a, 9/14/21
AG
All I know is that the whole death tax deal will absolutely demolish the small agriculture. Family farmers and ranchers don't have the type of money that would be required to pay for all the land their families own. We've already started talking with folks about options for ours. We have a good amount of family land in central TX, some of which dates back to the 1850's, and with the appreciation its had over the last generation of ownership, we'd be talking well north of a 7 figure payment. That's obviously something my brother and I, while successful in our careers, don't simply have lying around.
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TXTransplant
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In reply to YouBet • 8:27a, 9/14/21
YouBet said:
Recall that the limitations on Roth are partially an outcome of the ProPublica article on Peter Thiel:

https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank


Which is ridiculous because most of us using the Roth/Back Door Roth are investing the paltry $6,000 contribution from our cash savings that we've ALREADY paid taxes on.

The average American doesn't have access to stock options valued at a fraction of a penny.
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gigemhilo
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In reply to TXTransplant • 8:28a, 9/14/21
AG
TXTransplant said:
YouBet said:
Recall that the limitations on Roth are partially an outcome of the ProPublica article on Peter Thiel:

https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank


Which is ridiculous because most of us using the Roth/Back Door Roth are investing the paltry $6,000 contribution from our cash savings that we've ALREADY paid taxes on.

The average American doesn't have access to stock options valued at a fraction of a penny.
Its more about keeping you from investing in something that is tax free.
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TXTransplant
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In reply to gigemhilo • 8:38a, 9/14/21
I know. But the Roth income limits are pathetically low. I'm single, HoH, and it phases out at an AGI between $125-$140k. That's pitiful. Might as well just do away with it altogether, if they don't want any tax-free investment accounts.
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AgCPA95
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In reply to wangus12 • 8:56a, 9/14/21
AG
wangus12 said:
All I know is that the whole death tax deal will absolutely demolish the small agriculture. Family farmers and ranchers don't have the type of money that would be required to pay for all the land their families own. We've already started talking with folks about options for ours. We have a good amount of family land in central TX, some of which dates back to the 1850's, and with the appreciation its had over the last generation of ownership, we'd be talking well north of a 7 figure payment. That's obviously something my brother and I, while successful in our careers, don't simply have lying around.
I think that may have been killed in the latest version of this bill. From a WSJ article posted last night:

Capital gains

The plan would increase the long-term capital-gains and dividends rate to 25% from 20%, but it doesn't include the structural changes to capital-gains rules proposed by the Biden administration, which would have imposed taxes on unrealized gains at death. That provision drew opposition from Democrats, especially lawmakers from rural areas, despite a $1 million per-person exemption and special rules to protect farms and family-owned businesses.
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mosdefn14
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In reply to TXTransplant • 8:59a, 9/14/21
AG
TXTransplant said:
I know. But the Roth income limits are pathetically low. I'm single, HoH, and it phases out at an AGI between $125-$140k. That's pitiful. Might as well just do away with it altogether, if they don't want any tax-free investment accounts.
It's not the $6000 so much as the $58k mega backdoor they're going after.

However, most doing this strategy are going to be upwards of 40 years old and have already paid tax on it at 33%+, so it's really just the $58k doubling 4 or 5 times over the next 40ish years that is at issue.

The dems got a big win with the RMDs on inherited (Roth) IRAs. Roth 401ks have RMDs for the original owner, kind of expect to see RMDs added for Roth IRAs. While not taxable, it pulls another 10-30 (20 year life expectancy + 10 year stretch) years of tax free growth out into the taxable world.
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Harkrider 93
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In reply to mosdefn14 • 9:10a, 9/14/21
AG
Even the mega back door is fairly pointless. First, it is after tax vs pretax, so they are getting tax dollars. You mentioned another reason on how few will really do this. Lastly, they are proposing on closing this to those with $10mm in retirement accounts.

You really think stopping a reg backdoor or even mega backdoor is that big of a deal when there is $10mm already earning a boatload?

I did see they want to stop accredited investors accounts on IRAs which is likely more of an issue on growth than anything else.
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Harkrider 93
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In reply to AgCPA95 • 9:13a, 9/14/21
AG
AgCPA95 said:
wangus12 said:
All I know is that the whole death tax deal will absolutely demolish the small agriculture. Family farmers and ranchers don't have the type of money that would be required to pay for all the land their families own. We've already started talking with folks about options for ours. We have a good amount of family land in central TX, some of which dates back to the 1850's, and with the appreciation its had over the last generation of ownership, we'd be talking well north of a 7 figure payment. That's obviously something my brother and I, while successful in our careers, don't simply have lying around.
I think that may have been killed in the latest version of this bill. From a WSJ article posted last night:

Capital gains

The plan would increase the long-term capital-gains and dividends rate to 25% from 20%, but it doesn't include the structural changes to capital-gains rules proposed by the Biden administration, which would have imposed taxes on unrealized gains at death. That provision drew opposition from Democrats, especially lawmakers from rural areas, despite a $1 million per-person exemption and special rules to protect farms and family-owned businesses.
The talk is they will cut the exemption in half and the step up stays.
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