Joe Biden JUST Announced RAISING your TAXES!

so Joe Biden is officially planning on

raising taxes on people who do indeed

make less than four hundred thousand

dollars which is in contrast to his

original campaign promise to not

increase taxes on people making under

four hundred thousand dollars now Joe

Biden's plan initially will seem like

that is not true he's only increasing

taxes on people making over 400k but

this information just out actually goes

a lot deeper than that let's take a look

at this in detail so Joe Biden is

suggesting increasing the contribution

of Medicare taxes from 3.8 percent on

income above 400k to five percent now

initially first things first we look at

this and we go okay got it so more

Medicare taxes for people making over

four hundred thousand dollars so if you

make over 400k only the amount over 400k

gets an additional 1.2 percent tax right

so if you make four hundred twenty

thousand dollars twenty thousand times

1.2 percent means you're paying an extra

two hundred forty dollars on every

twenty thousand dollars over four

hundred thousand dollars that seems fair

right I mean yes after all that's Joe

Biden's idea is that hey you know we

just want people to pay their fair share

even though those in the top one percent

pay about forty percent of all of the

government's revenue and some people

especially uh those making over four

hundred thousand dollars pay somewhere

between forty four to fifty five percent

of taxes depending on what state they

live in which means in some cases you're

paying more than half of uh your entire

earned income to the government let's

just focus on where does this actually

increase taxes for people making less

than four hundred thousand dollars

because that's pretty important right

and after all why is Joe Biden thinking

about making these changes well mostly

why Joe Biden is thinking about making

these changes is because we if we jump

into the U.S treasury's sort of guidance

on where we're going to be if we follow

this unsustainable fiscal path of

basically spending the way we are today

on programs like Medicaid Medicare

Social Security and defense spending

well if we stay on this path eventually

the amount of Interest we're going to

pay as a percentage of GDP is going to

potentially go from maybe just paying

three percent interest to potentially 25

interest basically burying Us in so much

debt because we're spending too much

money as a country the treasury

Department themselves is saying we're

basically screwed if we stay on this

path and the only way to fix that path

is basically by contributing less or

taxing more right or just spending less

money via like austerity which is kind

of like what the European Union did so

if we jump over to this what's really

remarkable is over here this is the

loophole it's probably going to hit

limitations from Republicans I think

Republicans are going to push back

really really hard on this especially

since they control the house this is

part of a budget negotiation though it's

going to come up with the negotiations

of the debt limit personally I think

this is probably a political Ploy this

is probably Joe Biden throwing this in

here purposefully to piss off

Republicans to make Republicans go okay

okay okay we'll we'll let you tax that

one and a half percent more on people

making more than four hundred thousand

dollars but you need to kill this

loophole this ending of the loophole so

what is the loophole in simple English

well in simple English there is a

loophole that if you are self-employed

you could structure your income through

an S corporation you don't have to worry

about the name or the phrase or whatever

basically you call up a CPA and you go

yo make my taxes better okay and what

they can do is the following they could

jump over and say okay let's look at

your income let's say you and your

spouse make a hundred and fifty thousand

dollars as self-employed people let's

now go in and say we're going to pay

both of you a forty thousand dollar

salary so we're gonna divide up this 50k

income in three ways we're gonna say 70k

of it is a dividend and we're going to

say 40K and 40K are salaries now what

we're going to do is we're going to be

able to change the way we pay taxes see

ordinarily if you make a hundred fifty

thousand dollars of income the normal

way you're going to pay somewhere around

uh 12.4 percent in Social Security taxes

plus about

3.88 3.9 let's say in Medicare time oh

no sorry 3.8 in Medicare you're going to

pay somewhere around uh is that right is

it 12.2 maybe it's about 12.2 puts you

somewhere around

16.2 percent in taxes so ordinarily at

16.2 percent in employment taxes you're

looking at paying just employment taxes

of somewhere around twenty four thousand

three hundred dollars

that's what they're showing here and

this is for someone making under 400k

right this is 150k

well if we change it to you getting a

salary of 40 a salary of 40 and a 70k

dividend now what we could do is we

could avoid paying that 16.2 percent on

70k so what we're going to do is we're

going to save you 11

340 that's what we're going to save you

Joe Biden is now saying hey you know

what we're going to remove your ability

to exclude that 3.8 percent from over

here so in other words it's going to be

an additional tax on people making 150

000 with this structure of somewhere

around 2 660 so in this example simply

put if you're a self-employed person

making 150 gram and you're using an S

corporation you might have to pay two

thousand six hundred sixty dollars more

in taxes because of Joe Biden ending

that Medicare loophole that's the bottom

line so think about that the treasury

Department says we're on an

unsustainable fiscal path

Social Security and Medicare are

probably going to run out of money by

2033-ish Joe Biden here in this sort of

breaking news from today in his budget

reveal is suggesting hey don't worry

we're going to cover some of that

problem by making sure we tax people

more and this is going to make sure we

can actually get to 2050 without cutting

a penny in benefits that's Joe Biden's

argument now will it actually go through

with a republican-controlled house

probably not now a lot of people make

the argument that hey well this loophole

isn't fair anyway why is it that

self-employed people get to do this well

one of the reasons self-employed people

get to do this is because these are

known as payroll taxes and when you're

an employee this burden is split so when

you're an employee 50 is paid by your

employer and 50 is paid by you when

you're self-employed you're responsible

for paying all of it and in order to

incentivize people to pay business or to

create businesses and go spend more

money on computers equipment and take

more risk the government has come up

with this idea that hey well let's give

entrepreneurs a tax break now that's the

way they paint it but the reality is

it's probably the accounting Lobby

that's like hey how can we complicate

the tax code some more and basically

sell more corporate tax returns because

if you think about it if you don't have

an S corporation you could just pay do

your regular 1040 personal income tax

return and declare your self-employment

income on Schedule C I believe it is uh

now that is one tax return if you want

to take advantage of this tax loophole

and save you know 11 Grand or whatever

in that example well now you have to pay

a CPA to do your corporate tax return

and they might charge you a couple Grand

a year to do that so now you've

generated a couple Grand a year in

recurring revenue for accountants you

save nine thousand dollars net net in

taxes now the government is out eleven

thousand dollars so it's probably the

accounting Lobby that's pushed some of

that and that's probably why the tax

code remains as complicated as it is but

it's very interesting to see Joe Biden

create this potentially two-pronged

attack I'm gonna raise taxes on those

making over 400k which is his campaign

promise but in the same vein he's

actually increasing taxes for a lot of

self-employed entrepreneurs especially

those making under 150 160 000 dollars a

lot of those S corporation benefits

start getting limited once you go above

the Social Security limits of about 160

000 for 2023 the now you're really only

saving about that 3.8 percent but what's

really remarkable is think about this

example this is where it gets a little

bit crazier as well let's say you're

making 250

000 right that 3.8 and you're paying

yourself maybe an 80k salary right well

technically you might be saving

3.8 percent on all of that difference

right that's a lot because that's a

hundred seventy thousand dollars times

three point eight percent well if Biden

closes that loophole it's actually going

to cost somebody in this situation six

thousand four hundred and sixty dollars

so in other words if you're

self-employed and you have an S corp

you're looking at this going dude what

the hell man you said no tax increases

on people making under 400k this is

clearly a tax increase on those making

under 400k closing that loophole is just

sort of the media way to cast it aside

and say yeah well it was just a loophole

anyway but it's been in existence for a

very very long period of time and a lot

of people use it and rely on that and

created s corporations because of that

benefit so it'll be very interesting but

it's just another example of politicians

on one hand saying oh no we're not

raising your taxes but on the other hand

raising their taxes and this is why I

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actually going on with Biden over here

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