Retire Smart Austin | Episode 170

Cynthia de Fazio  00:28

Welcome to Retire Smart Austin. My name is Cynthia De Fazio, joined today by Phil Capriotti, Senior of Empower Wealth and Tax and to our viewers at home, we have a very important topic today. We’re going to be talking all about the proposed tax changes that President Biden is actually talking about doing right now. How was that going to affect your retiree and how is it going to affect the inheritance? Phil, this is a very important topic overall. Just speaking about the plans that Biden has right now for these tax changes affecting the retirees, affecting their inheritance. Wow, we’ve got to talk about it.

Philip Capriotti  01:03

There’s a lot going on in this new proposed tax plan. As a matter of fact, from what I’m reading, it’s actually borders on the draconian side, okay? And what I mean by that is, when we look at us who we are, okay? And I’m talking about businesses, but I’m really referring to Baby Boomers. I’m talking about those of us who are getting ready to retire, who have saved, in many cases, millions of dollars in our 401(k)’s in our retirement accounts. They’re literally going, they’re leaving no stone unturned, and they’re going coming after these accounts, these accounts, since their government accounts, and they can be taxed at any time, at any rate, just by passing a law. It’s really kind of scary. So, what we’re going to do for you today, folks, is we’re going to outline some of these proposed changes. Now, please understand, don’t be worried. They have not passed yet, but this election cycle, this year, is going to be probably one of the most important cycles that we’ve ever experienced in our lifetime. They really want to, it appears as though they want to use our retirement accounts to pay down the debts that has been blown up, to excuse me, over 35 trillion astronomers. So, these tax cuts and these tax changes are going to affect small businesses, medium businesses and large corporations. In addition, they’re going to affect us as individuals. They’re going to take change the uniform life expectancy code that’s coming up in all probability, in secure act 3.0 which is right around the corner, tell your children, tell your grandchildren, if they’re voting age, folks to get out and vote. I don’t care what party you vote for. It doesn’t matter. Get out and cast your vote Absolutely, because a lot of folks are going to be voting, not necessarily folks that have originally come from our country. So, get out and vote. So, let’s talk about these tax changes. I’m going to start with the corporate tax changes. Okay, now corporate tax changes, folks, it affects our LLC. So, we’re talking about the small business, like my business, like your business, right up to the tire shop down the street, the mechanic shop, to the large corporations. So, one of the very first things they want to do is they want to change the corporate tax rate from 21% which makes our which makes us extremely competitive in the market. I’m talking about globally. They want to change it to 28% now, by changing that tax code from 21 to 28 it will force, in all probability, corporations to move out of the country. Wow. So, this is a big, big change. So, what does that really mean to you? What that means is, when the corporation moves, the jobs move so, and this is something I don’t really understand. I don’t believe that some of these folks that write these bills ever took economics or accounting. I really don’t. I really don’t, or it’s an intentional issue, but in either event, it makes no sense to grow an economy. You need to reduce taxes. So, by doing that, that will make us the that will be in the highest tax bracket globally.

Cynthia de Fazio  04:45

Well, Phil, not only that, when you mention that statement of having to close businesses and move work to overseas, doesn’t that take away from our American workers as well. I mean, you’re talking about unemployment rates going through the ceiling.

Philip Capriotti  04:58

This is why it amazes. Me when I hear this is only going to affect millionaires and billionaires and people making over 400,000 a year, it’s just disingenuous, in my opinion, when you really start to dissect each one of the pieces of this tax bill puzzle. So yeah, it absolutely will. So, in addition to that, they also want to make changes. Excuse me, I’m going to give it to you right directly from the notes. They want to change the- they want to change the Corporate Alternative Minimum Tax from 15% to 21% Wow. So, understand, we only want millionaires and billionaires. It really makes me laugh when you increase the taxes on corporations now, in this case, going from 15 to 21 that’s almost a 50% increase. Yeah, absolutely. So, what do you think the corporations have to do, they have to raise prices for who, for us, the consumer. So, I’m not sure whether it’s being done, and I feel kind of passionate about, are they doing it on purpose, or are they just…

Cynthia de Fazio  06:14

Trying something out?

Philip Capriotti  06:16

Trying something out.

Cynthia de Fazio  06:17

Just to see how it goes.

Philip Capriotti  06:18

I didn’t want to use the other words, but okay, I wanted to say, are they incompetent, or are they doing this on purpose? Go into something else at any rate, it’s extremely important. Now this is part of the Biden administration 2025, new tax plan. So, assume this, if the current administration continues, fine, but you can expect these things to go into force immediately. And by the way, some of these changes they’re actually making effective January 1, 2024.

Cynthia de Fazio  06:57

Okay, So correct me if I’m wrong. Phil, when we first started talking about this, when this was first proposed by President Biden, wasn’t this only going to affect those earners making $400,000 and above? It sounds like it’s actually affecting everyone, correct?

Philip Capriotti  07:13

It’s a shotgun approach. It affects everyone. And if you think inflation is bad now or has been bad over the last two years. Look out below, because this is this is designed to literally shrink the middle class, because indirectly, they are being taxed. Everyone is being taxed. When you raise taxes on corporations, you do one or two things, just with these two proposals, Chase companies out of the United States into other countries, okay, like we saw before. And then the other thing, by changing the alternative minimum tax and increasing it not 5%, not 10%, 50%. that is going to increase- there’s going to be ripples and shock waves with consumer prices.

Cynthia de Fazio  08:01

Well, 100% because Phil, even though we know from the news that they say inflation is becoming under control, that still does not really matter, because the prices of goods are still extraordinarily high. You and I both feel this when we go to the grocery store, when we go to the gas station, even booking an airline ticket right now, prices are literally, no pun intended, sky high. They truly are.

Philip Capriotti  08:22

Well, not only that, I mean under control for who? Okay, when I take a look at, I have five children, okay, three of my children. God has blessed us, blessed us with grandchildren, yes, when my children, and they are professional, go to the store, it’s- not only are prices 20 to 30% higher across the board, yes, when we start to take a look at- folks, take a look at your homeowner’s insurance,

Cynthia de Fazio  08:52

Oh my gosh, absolutely.

Philip Capriotti  08:53

I don’t know, our homeowner’s insurance has gone up about 40%.

Cynthia de Fazio  08:58

Car insurance.

Philip Capriotti  08:59

How about your auto insurance, absolutely. So, you think all of these car thefts that we see, all of these, you know, bump and rub- and Rob, or however they put it, it’s affecting everything. So, the entire policies that we’re seeing are, in my professional opinion, this humble man, I believe that these policies are not only draconian, but are hopefully not to design- They’re not designed to hurt the American worker and the American taxpayer, but it sure looks like it to me.

Cynthia de Fazio  09:31

Phil, I agree. We’re going to take our very first commercial break, but you are going to actually provide something to your- to your viewers at home. That’s going to be a benefit.

Philip Capriotti  09:39

I am, I am saying Thank you, Cynthia, to cut you off there. You need to give us a call today if you are in the retirement red zone, 5 to 10 years out to retirement, 3, 2, 1, the closer you get to retirement, it’s extremely important. Important that you not only have a tax efficient written retirement plan, but understand every time they make a tax change, there’s a window you need to work with an advisor who’s a tax expert and someone that’s used to handling this type of thing. So, give us a call today. Let’s get that written retirement income plan that’s tax efficient regardless of who is running the show. Give us a call. 888-818-6557, we have five spots for the first five callers, or you can click that little QR code that you can barely see in the left-hand corner.

Cynthia de Fazio  10:40

Phil, thank you so much to our viewers at home, that number to call is 888-818-6557 we’re talking about a very important show today, the topic of Biden’s proposed tax changes, how that’s going to impact retirees and just overall legacy planning, if you will. But there’s hope. All you have to do is call in and book that consultation with Phil and his team. The number is 888-818-6557, or go ahead and snap that QR code at the bottom corner of your screen that will take you right to Phil’s landing page, and you can schedule your time accordingly. We have five spots open this week. We’re going to take a very short commercial break when we come back, I want to talk to Phil in depth about capital gains. What happens with capital gains if Biden changes some of the tax laws? Stay tuned.

Philip Capriotti  11:30

I first got in the financial world in college. The first year, summer, I got a position as a laborer underground, and about 110-degree heat after that first year, I realized there’s no way on God’s good green earth that I am going to be a laborer for the rest of my life. So, it made me really buckle down to my studying. Second year, a friend of mine got his insurance license and worked with a company called the Palm Ross agency. So, my very first week, I’m broke. I go in, they give me 50 leads that been worked by about seven different agents. So, I’m thinking, I think they don’t want to give me the new leads because I’m green. But okay, I’ll go on it. I had made more in that first week that I made in an entire month as a laborer. I did that my sophomore year, my junior year, in my senior year, I got ready to graduate while graduating top of my class my senior year. So, I’m getting offers now. And I have another offer from banker’s life and casually, to go into their entry level management program. I was the very first branch manager, the youngest branch manager with Bankers Life, and casually, I was running the Philadelphia office. By the time I was 25 I was running the Toms River New Jersey office, and I was running the reading office. So, my wife was not too happy with me at that point. So about three years later, I started my own company, and that’s when I actually decided to become independent, and then the rest is history. I’ve been in this industry for quite some time.

Cynthia de Fazio  13:04

Welcome back to Retire Smart Austin. My name is Cynthia De Fazio, joined today by Phil Capriotti, senior of Empower Wealth and tax, and we’re talking about a very important subject that impacts everyone. Overall. Doesn’t matter where you are, what you earn. This is for you. It’s actually Biden’s proposed tax changes, how they’re going to impact your life overall as a retiree, and also legacy planning, a little bit of everything right now. So, Phil, a very important topic that I’m so glad that you chose to talk about this morning, because a lot of people are unaware how this will affect their personal economy, if you will.

Philip Capriotti  13:37

Well, many folks are looking at this program and saying that’s businesses. You know, it doesn’t really affect me, but the fact is, it does. It affects all of us. We’re going to switch, and we’re going to bounce between corporations, small and large, and then individuals. Okay, so just an FYI. So, let’s talk about these capital gains. I never thought in my lifetime that I would hear any politician think that raising taxes would get them elected. But obviously I understand that if I tell you, listen, Cynthia, look, I understand that you’re hurt, and I understand I’m going to take money from Phil and I’m going to give it to you and your kids if you vote for me. Is that okay? Now, years ago, I think that was illegal, but that’s basically what I’m seeing. You weren’t allowed to buy a person a beer before they’d go and vote. Now we have a whole different bag of tricks and goodies. So, here’s how this new, and again, they talk about it’s only going to affect people who have a million or make a million dollars, but they start once. My dad used to say, give you an inch and you take a yard. Well, that’s exactly what this plan really opens up the door. You open it up a crack, and then you blow. Asset wide open. So, what they want to do is they want to eliminate long term capital gains. Doesn’t that sound great? We’re going to eliminate long term capital gains. Great. And then in the back they’re going to they say, we’re going to make it ordinary income tax. So, wait a second, you’re going to eliminate it was like when they did the secure Act One. We’re going to change the RMD age from 70 and a half to make it 72 but we’re going to get rid of the stretch IRA for your kids and grandkids. They have to now take that money out over a 10-year period. So, let’s break it down. Okay? Because a lot of moving parts here. How this works is when you sell any type of asset, a business or any asset, okay, it’s called long term capital gains if you held the asset for at least 12 months or more, right? It’s short-term capital gains if you bought it and sold it within 12 months. Now, short term capital gains really are ordinary income tax. So short term capital gains your tax at whatever bracket you’re in with long term capital gains. To make this, what they did was currently, right now, and this was part of the Tax Cuts and Jobs Act. If you were making married filing joint make it under $88,000, I think it’s 91 now, you paid 0% capital gains. Anything over that $80,000, $90,000 you paid 15%, up to over $600,000 anything with income over 600 and quarter, something of that nature, thousand, you pay 20% so capital gains rates went from 0 to 15, as where most of us were at, to up to 20. So, here’s how this works. This is now going to be added as ordinary income. Okay, let’s assume for a moment you’re working. Okay, let’s assume for a moment that you have income. Let’s assume for a moment you sell a stock, or you sell anything, okay, the capital gains, which we are seeing now will now be ordinary income. So, Phil, what do you mean? Well, if I’m making 250,000, 300,000 a year, and I sell a piece of property instead of paying a flat 15%. I am now in the, what we would consider 24% tax bracket. Now, once they get rid of the Trump tax cuts, that 24 bracket goes up to 28 and 33, half of that 24 bracket goes to 28, the other to 33 so what does that mean? That means that asset that I sold, instead of paying a flat 15% I’m paying between 28 and 33%. Wow. Let’s assume for a moment I sell a home. Yes. Okay, this was one of the crazy parts, I couldn’t believe- normally we could do a 1031 exchange. This affects realtors. Well, this new law only allows us to do a 1031 exchange up to 500,000 in gains. Wow. Anything above 500,000 hits us as ordinary income tax.

Cynthia de Fazio  18:18

Oh, my goodness.

Philip Capriotti  18:19

So, when you simply start to and by the way, I don’t mind reading these things and doing these shows. I kind of like it, because you really need to know. But once you start to unpack this proposed budget and tax change, this is why I started off saying it seems kind of draconian. It seems like they want to take wealth from those of us who have worked hard, paid taxes for the last 30, 50, 60 years, and and I guess, cause new government programs, inactive government programs. So, I know I’m stumbling a little bit, folks, and I apologize. I’m just a little irritated.

Cynthia de Fazio  19:00

And you’re passionate about what we’re speaking about, because it’s so important to all of our viewers at home, regardless of where they are in their income level.

Philip Capriotti  19:07

Well, my thought is, once they pass some of these other- some of these other segments in this bill, there’s no stopping them. There’s no stopping them. It’s really, we’re on the road to potentially socialism. Okay, so with these things, I’m going to actually, near the end, I’m going to list all of them for you. I’m going to also tell you where we got the information. I want every viewer to look this up and keep this in mind when you go to the voting booth this November.

Cynthia de Fazio  19:42

Wow, Phil. Thank you so much to our viewers at home. We have to take a very short commercial break on today’s very important show. That number to call in is 888-818-6557, when we began the show today, Phil announced there were five spots available. That’s all he has room for this week, for this complimentary Consultation, if this news is impacting you, if you’re thinking about your personal economy, if these changes take place, this is the perfect time for you to call in and take advantage of that complimentary consultation. 888-818-6557 or simpler still, just grab your smartphone, click on that QR code at the bottom form of your screen that will take you right to the landing page for Empower Wealth and tax, and you can schedule your time accordingly. Remember, we have only five slots open this week. We’re taking a very short commercial break. Don’t go anywhere, unpacking all of the Biden proposed tax changes. We have more when we return.

Philip Capriotti  20:36

Hello, my name is Phil Capriotti. You know, we have been helping folks like you create a tax-free retirement income plan for over two decades. I am a firm believer that if you’ve worked and paid taxes for the last 50 years, the one thing you shouldn’t be burdened with is excessive taxation in retirement at Empower Wealth and tax we specialize in helping you reach your desired retirement lifestyle with a tax free and tax efficient retirement income plan with the probability of taxes going up significantly in the future. Let’s plan your retirement right call us today or select one of the options below and start empowering your retirement right now.

Cynthia de Fazio  21:26

Welcome back to Retire Smart Austin. My name is Cynthia De Fazio, joined today by Phil Capriotti, senior of Empower Wealth and tax. And we’re talking a very about a very important topic, if you will, Biden’s proposed tax changes, how that’s going to impact everyone overall, regardless of where you stand politically, this is truly an economic thing that will impact every one of us. So, Phil, what a great show.

Philip Capriotti  21:50

Yeah, it really is. And by the way, folks, I’m not picking on President Biden at all. This is really the Biden administration. This is a machine, because we all know, we don’t know who’s really making all of the decisions. We know it’s the administration, sure. So, I’m just going to go and take it right from the top, by the way, all of this information, and we’re going to detail it. We actually have a two part show next week. We’re going to finish this up as well. So, this comes out of the Tax Foundation. I got access to this on June 25 at 7:24, in the AM. So, the major business change models. It increases corporate income tax from 21% to 28% effective 2024 backdating it to January 1 of this year, they want to increase the corporation’s Alternative Minimum Tax introduced in the inflation Reduction Act. I mean, they already added to 15% they want to increase that from 15% to 21% effective 2024 Wow. They want to quadruple the stock buyback tax implemented in the inflation Reduction Act. I think they named these acts to accomplish the opposite goal, but that’s another story. They want to increase it from 1% to 4% what I just say in the previous segment, give them an inch, take a yard. So, this 1% this is new part of the inflation so called Reduction Act. They want to make permanent excess business loss limitations for pass through businesses. They also want to limit the deductibility of employee compensation under Section 162 of the IRS Code. They want to increase global, intangible, low taxed income. It’s called GILTI. GILTI. Oh, what an acronym. G-I-L-T-I. They want to increase that tax from 10.5 to 21% we’re talking about close to doubling, in many cases, at least, increasing these taxes 50%, almost doubling. My question is, why isn’t anyone else talking about this? This should be right on the agenda of every news media station. I don’t understand, right? You don’t have to be a CPA or work for CPA firm to understand how this is going to affect all of us, my thought and our feelings when I talk with other professionals, is this is going to take our inflation level to a whole other level. It was bad enough that we cut back domestic oil production and started to offing it to Russia and Iran. That was bad enough. That’s really where this started to increase the prices, increasing these taxes. That’s pretty much like the knockout punch. So, let’s go ahead and finish this, because I want you to look it up. And by the way, folks, if you’re tuning in late, this is right out of the town. Tax Foundation. And by the way, this thing was proposed March 25, 2024, this is relatively new news. It’s been out for four or five months. Now. They want to repeal the reduction, the reduced tax rate for foreign dividends. Okay, I can get that. Let’s talk about the individuals. So, what they want to do is they want to take the Medicare tax depending on what you’re making. Now, I pay 0.9% for Medicare tax, by the way, folks, we all pay 0.9% depending on your earnings. They want to increase it to up to 5% Wow, in addition to our federal tax Wow. And if you live in a state, thank God we know that has income taxes. This is a whole other issue. So, what I would say is, number one, pick up your phone, click your QR code, call us, come into the office. I promise you, I will not bore you with a bunch of tax mumbo jumbo, okay, but what we will do is we will put together a plan to make sure that your retirement is as constructed, as tax efficiently as possible. If you do not plan for tax efficiency in your retirement, there’s more of this to come, and unfortunately, we’re going to talk about this what they want to do with the uniform life expectancy code. So, you know, I My wife tells me, Phil, why? Why are you still working? You should have retired. I said, Honey, I am retired. I absolutely love doing this pro bono work. It’s all about educating folks. It’s about giving back. I believe that all of us who have worked hard our lives and have saved I don’t care if you’ve saved $100,000 or $100 million. It doesn’t matter if you’ve worked hard and paid taxes for four or five or more decades, it’s time. They’re coming after our pocketbooks, after we’ve built this country with respect to taxes, they’re going to take as much as we allow them. It’s extremely important to make sure that your retirement plan is as bulletproof as the politicians who run our country.

Cynthia de Fazio  27:19

100% Phil, thank you so very much to our viewers at home. All I can say is, Wow. What an impactful show. That number to call is 888-818-6557 is, as we stated at the beginning of the show. This is not a political show. This is how it affects everyone’s household overall. So please don’t miss this opportunity to call in 888-818-6557 or go ahead and snap on that QR code at the bottom corner of your screen. Be safe, be happy and be blessed. We’ll see you back one week from today. On Retire Smart Austin, take care.

Philip Capriotti  27:50

Thank you, Cynthia.

Cynthia de Fazio  27:51

Thank you, Phil.