| Gerardo Del Real:
Taxes are going up, Nick. And then we knew that was coming. They're not as extreme as I think people projected. President Biden is due to formally announce an outline this week. And so it's pretty clear that the corporate tax and the tax rate for the better off amongst us is going to go up a bit. I'd love to hear your take there. My quick take is yes, there's going to be an increase. No, I don't see it as something that is so consequential that all of a sudden I no longer want to make money.
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| Nick Hodge:
Right, well, that's typically how taxes are. But that's also how frogs get boiled alive. So it's something to definitely be cognizant of. I've seen too many articles and it's being approached from too many angles for there not to be something coming. And these are just some of the things that are floating around that I think are going to be grabbed and put into order in the next couple of months. And so just something to be aware of, but certainly I think a storyline or a narrative that's going to expand over the Biden administration and one that you're going to see fear newsletter promos based on.
We already saw the capital gains tax floated. We were talking about that when Yellen mentioned taxing financial transactions, stock sales, and capital gains.
We've seen this week or last week, the floating of the $400,000 level. If you're making $400,000 or more, your taxes are going to increase.
And then, and this I agree with actually, is we're talking about IRS enforcement, which is not a tax increase, but collecting taxes that are due that go unpaid. And it's no secret that the IRS has been vastly understaffed and underfunded for a long time — that it's easy to hide money. Here we’re talking about high income earners — not $400,000 — but more than twice that, like $1,00,000+ per year. And so we're seeing more reports come out now about how we can increase enforcement, increase funding for the IRS, add more agents, and specifically target some of these practices that are hiding money.
Perhaps even, and really gets the simple solutions, the requirement of some sort of 1099-like form for your bank accounts, that would have to justify up against your income on your reported tax. And that's not a tax increase. That's like a scared straight program. You’ll have to then make the deposits and income in your checking and savings accounts line up with what your tax filings say.
So if you don't have a good tax person, get one, because it's very complex. And that means both an accountant and a tax attorney, depending on your level of income. Get smart about how to protect yourself and your estate, your wealth. And I'm not talking about doing things illegally. There's always ways to get ahead of the system and use it to your advantage, but you need to know those people who can help you do that. Because it’s definitely coming.
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| Gerardo Del Real:
And just to clarify, because this is an important distinction, that $400,000 threshold will be for households, not individuals. So, if you're making $200,000 and your partner's bringing in the same amount, you might be getting hit with a tax hike.
And again, I don't think that the proposal is extreme considering what our balance sheet looks like. I also don't trust government to actually do anything wise with the money. Though I will say, I don't have a problem paying the top tax rate and it going to 39.6% from the current 37%, if I can actually see you doing something that's tangible with the money. If we're really going to build out our highway system again, and our infrastructure, and our access to the internet. The 2.6%, not a big deal. If it's just going to be wasted and we're going to continue to counterfeit money and not actually do anything with it, then I don't know why we pay taxes at all.
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| Nick Hodge: Well, and now you get to the point where I start to get fired up. I write my check to the IRS every year like I'm supposed to. |
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| Gerardo Del Real: Don't remind me. |
| Nick Hodge:
And I'll complain about it, but I know I'm doing my part. But when you start to get pissed off is when you see things like you're talking about, right? When you see senseless corporate giveaways, when you see politicians give away tax breaks and favors to companies to build factories that don't materialize, or that never offer the jobs that were first promised. Or when you see the rollout of a botched vaccine website that nobody can use, for example. And then it's like, or and to bring it full circle, and then we can wrap this podcast up. Or when you don't have control over it, like when you continue to see military spending that's multiples above the next closest country. Or when you see a country that's trying to take away your vote to have a voice in these procedures through voter suppression acts. And that's when you start to think, "Well, why the hell am I paying these taxes to begin with?"
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Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Hodge Family Office, Family Office Advantage, and Foundational Profits. He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
*Follow Nick on Twitter.
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