In this video, I cover what Joe Biden's tax plan is and why Cathie Wood is warning about the possible implications of it.
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Link to sources used in this video:
https://www.youtube.com/watch?v=MzPzz24UN3c
Join our free discord here: https://discord.gg/xUWB2ExVcr
My Second Channel:
https://www.youtube.com/channel/UCPkDot_lMk7HB_c68HubbUg
Twitter: https://twitter.com/casgains
Instagram: https://www.instagram.com/casgainsacademy/
Soundtracks provided by LCS, Nanobyte, Emphermal, Defyant, and Lakey Inspired
Copyright Disclaimer Under Section 107 of the Copyright Act 1976: All rights belong to their respective owners
With the rise of stimulus checks over the past year, it's not a surprise that will have to be paying for this in some shape or form, whether it be in taxes or inflation, either way. The purchasing power of our wealth must go down when hefty government bills are created. The biden administration is intent on creating a huge tax hike that could stifle innovation with growth related stocks and may possibly lead to a sell-off in certain stocks. In this video, i will cover why kathy wood, the ceo and ceo of arkhan vest believes that the biden presidency's tax hike could lead to a drastic change in the market.
Climate welcome to caskians academy, if you're new to the channel, please consider subscribing for more content. Like this, and let's get right into it before we get into why cathy wood is wary about the biden tax hike, let's go over what the biden tax plan actually consists of. The biden tax plan has been spooking the entire stock in crypto market and has led the stock market to correct and bitcoin to fall below 50 000 per coin. But, first of all, we need to get some historical context back in 2017, former president donald trump slashed the corporate tax rate from 35 percent to 21.
In a series of other decreases in taxes, joe biden looks to reverse a lot of these changes which, according to upenn's wharton model, will increase u.s tax revenue by 2.1 trillion dollars. These changes will have many rigorous implications on the stock market. So it's important to understand what we're actually talking about here. The first major change in the biden tax plan is an increase in the corporate tax rate.
Biden is looking to increase the corporate tax rate from 21 to 28, which essentially reverses a huge portion of trump's decrease in taxes four years ago, as you can see in this graph, the u.s corporate profits as a share of the gdp is relatively low compared to Other countries worldwide, an increase in the corporate tax rate, could lead the u.s to be on par with most of the other countries in this graph. Yet that's not the only important part of the tax plan. One major change: that's coming is a guaranteed 15 tax rate for big firms. Today, plenty of large companies don't pay the full 21 corporate tax rate.
Some companies don't even pay a single cent. This is done through all kinds of tax code provisions, including deductions, offshoring and exemptions. Joe biden plans to end all of this. He plans to create a 15 minimum tax rate on book income, which represents the profits that companies report to investors.
The reason why he wants to do this is because some companies report income to shareholders that doesn't actually get taxed much due to a variety of loopholes. That way, these large companies can report extremely high incomes, while not paying much tax at all. Biden's new tax plan will make it so that companies with an annual income above 2 billion dollars have to pay at least 15 percent of taxes of their book income. The biden administration estimated that 45 corporations would have to pay this 15 tax rate. Now this wasn't the worst case scenario as bilingual was planning to put this mandatory 15 tax on companies with 100 million dollars of annual profits. But now it's been raised to a minimum of 2 billion dollars. Another major change coming is a doubling of the global intangible low taxed income that might sound like nonsense right now, but it will all make sense right now. Many companies move their profits overseas in order to get a lower tax rate.
For example, profits can be moved to china in order to benefit from lower costs and lower taxes. Again biden is about to end this. He wants to increase the global intangible low tax income to 21, which basically doubles the tax rate for the income that companies make overseas. To put this into context, tesla's profits for china operations will now be taxed at a much higher rate.
What this means is that tesla may have to increase the price of its vehicles or simply make less profit. In addition to these, there are also numerous other changes that are being made to end profit. Shifting another portion of the biden tax plan that has been scaring investors is the increase in the long-term capital gains tax rate to as high as 39.6. This is a huge increase in the current base: capital gains tax rate of 20 percent and keep in mind that this is only at the federal level.
After all, we have to pay taxes on the state and federal level for those in new york. The capital gains tax rate combined at the state and federal level could be as high as 52 percent for californians it can be as high as 56.7 percent, so these are clearly extremely high numbers. The democrats have been arguing that the current capital gains tax rate makes it so that people can get their income from investments rather than wages. Consequently, this disincentivizes the wealthy to create businesses and hire people when they can simply make money through investments.
On the other side, the republicans are arguing that the current capital gains tax rate encourages people to save money and helps the economy grow either way. We know that an increase in the capital gains tax rate is harmful for us investors. The last major change coming is the replacement of fossil fuel subsidies with clean energy incentives. There have been many government payments for oil, gas and other fossil fuels for years now, but now biden looks to replace this with clean energy incentives.
The treasury department estimates that the elimination of fossil fuel subsidies will increase government money by over 35 billion dollars in the next decade. This essentially means that oil and gas company profits are about to lower substantially. Politicians have tried to do this before, but it's been difficult to pass because congress and the energy industry have consistently opposed this idea. Overall, we know that the biden tax plan will likely increase u.s tax revenue at the sake of company profits. With that being said, let's get into why kathy wood has been wary about the biden tax plan kathy first publicly spoke about biden's tax plan back in late 2020, before the election happened. Kathy stated that if biden wins, we believe some of the platforms and technologies have hit escape velocity and are on their exponential growth trajectory already. We don't worry about those and they may actually gain more traction if taxes and regulation go up now, while some large companies, such as tesla, have reached exponential growth. Others may still get crushed by the tax plan.
Kathy mentioned that the smaller innovative companies would be crushed by the biden administration, whereas the larger innovative companies may actually benefit from the regulatory mode outside of innovation. She declared that her and ark invest as a whole believe. Beyond the evolution of innovative platforms, the us will lose his competitive edge when taxes and regulation are going up and we believe innovation will effectively be exported to the rest of the world. In other words, innovation isn't going to be as fast as before in the u.s kathy also spoke on this subject in early 2021, where she warned that taxing the rich has not been a good strategy when it comes to state income.
Taxes we've already seen the migration of people to low tax states, for example, oracle, palantir, hp and tesla have all left california due to high tax rates and regulations. The major clash with elon musk in fremont, california, that occurred with the reopening of tesla's operations was a strong manifestation of the kind of movement occurring. Cathy thinks that a similar type of migration will happen with the u.s people, and innovative companies will be migrating outside of the u.s because of high taxes and regulation. She's, hoping that this doesn't happen, but does see it as a risk with the biden tax plan.
The most damaging parts of uh his proposals or purported proposals are uh increased tax rates, increased uh tax rates and and focusing on you know certain income levels, so the marginal tax rates, the highest ones we have seen, has not been a great strategy. Uh administrations in the past, who have tried to do that, have found that the tax the tax base would disappear on them, uh and and we're actually seeing this uh it's in response to the corona virus, but uh we're seeing a migration to low-tax states uh. That is very visible on both both coasts and um. I i think that uh uh, this new administration is going to uh they're, going to hear the other side of the debate in terms of what else will migrate, and as i've mentioned before many times, you know it could be if they raise capital gains, tax rates And corporate taxes and increase regulation again that we will probably see a migration of innovation and innovative companies and creative people to other parts of the world, either back to their home countries or or and so forth and um. Our our strategies are global in scope. So we will follow them and uh, so so we're hoping uh this uh does not become a trend, but we do believe it is a risk. It's also notable that higher tax rates does not necessarily lead to higher tax revenues in the early 20th century. When the us government raised taxes, they actually received less tax revenues overall than prior to raising tax rates.
This is because people are not dumb and especially those with lots of money. In my opinion, they would just find other ways to protect their capital against taxes, and the biden tax plan may have adverse effects going forward. Overall, it's clear that arc invest believes that the biden tax plan will bring some asymmetrical advantages. Large companies like tesla and square may actually benefit from high regulation because it prevents other smaller companies from passing through regulations without the economies of scale.
On the flip side, innovation might accelerate faster internationally than domestically, which is generally not a great occurrence. However, some companies heavily exposed internationally, like tesla, could actually benefit from the acceleration of innovation internationally. Let me know what you think about biden's tax plan. Will it be beneficial or harmful for the positions you own? If you enjoyed this video, please hit that like button and don't forget to subscribe and i'll see you in the next one.
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Damm, you make it sound like Biden will be in office indefinitely and the house will remain Democrat. Remember, nothing lasts forever, nothing!!!
Really reading about people making over $350,000 monthly from passive income investments even in this crazy market, any tips and pointers on how to make substantial passive income would be appreciated.
United We Stand, Biden We FAll. And yall really believe this man got more votes than Obama? Dont worry Trump will be back again in 2024 to help us all again so this time vote for the citizen not the politicians. Duh.
I admire the efforts u put in your videos mate, digital currencies continues to reshape the world globally, its hard for for anyone going against them these days, though from a trader's perspective i feel we really need more experts in the field updating newbies / lnvesttors on how the community works. crypto currencies are gradually moving towards something big and the price surge over the past few months is just the beginning of greater things to come
When Companies leaves, jobs goes along with it. You'll be left with a dying warzone city like Chicago. Sounds like Seattle Oregon and SF bayarea is heading that way. Where drug dealers and gangs kill for scraps.
Biden tax hike employee pays 15 percent on on 15 an hourly at 15percent of your money gone you get 82 percent of your check after tax of bidens
Oh come on, these rates for companies should be paid. They make $, they should pay these tax hikes. They cut what i can claim and i can hardly afford health ins. These companies need some responsibility.
Our economic system is doomed no matter who's in office or what financial tinkering they do. Remember, all of this has been approved by the .01% that govern our country behind the scenes. We've been led down the garden path by experimental economics, a kind of play-as-you-go approach. They don't know the outcome any more than you do. But social upheaval and rioting will be the result. We have to devalue the dollar or simply, default! The banks should not have been saved during Obama times, but some effort should have been made to make the people who lost their homes due to the low mortgage scam, whole again. Let the zombie banks and businesses fail. Their greed should not have been rewarded. Now the system must come down because of
financial engineering and worthless default swaps. What the hell are we spending 750 Billion+ on the military for? There are no actual enemies.
All I see in this video is the super rich
Getting richer and basically saying if you up the tax we will leave I would give the rich nothing except massive tax hikes and if they leave so be it the US ain't making any tax of them any way so tax the rich not the poor. And fuck big business give the little guy a chance
I used to care about the government raising taxes on big corporations, because they always passed it back onto us, but many large corporation can afford it now that they don't pay squat for Healthcare or Pensions anymore. Most new hires will not be able to receive a pension, and who knows if Social Security will be there as many work paycheck to paycheck. So they pass it on back to everyone in more ways than one by being slow to give raises and taking away crucial benefits. (Can you picture the face of the Tesla CFO when Elon said he wants to make Doge Coin a method of payment for their electric vehicles?) I am sure they will make it happen, but you know that initial suggestion had to rock the board room.
The rich stay rich by spending like the poor and investing without stopping then the poor stay poor by spending like the rich yet not investing like the rich
If you want to become a millionaire, seek proper financial guidance from a licensed professional more so one with experience of the past bear markets.
Careful with the FUD. Smart money looking for an opportunity to scare you out of crypto in order to get in before you did. Now retail and commodities… yeah… I wouldn’t be that space. I’d wait for 2020 crash before I got back into retail or commodities. Smart money knows non accredited investors have left… so they are pretty much victimless… minus those in 401k’s.
They got into crypto late and will sell big together with retail in order for the spaces to move in harmony. This way they can better chart their algo gains.
I don't know who needs to hear this, you've got to stop saving money, invest some part of it, if you really want financial freedom
Although you're correct about the stock market and some of the downstream, you're analysis of its cause is completely superficial and lacks any real ground work, the fact you completely disregard military spending is extremely problematic at best
Biden's tax plan brings taxes back to 2017 levels. Not 1950s levels. So why tf do Cathy and Cas keep talking about 1950s taxes? It's a blatant misdirect. They're lying to you so they can keep dodging taxes while they exploit the public infrastructure you paid for.
I'm new to Bitcoin and would like to invest but I've got no idea on how to make good profit. Pls what's the best approach you'd recommend?
Screw democrats, increasing my taxes and where’s it going? Into other peoples pockets, straight garbage!
Biden has to raise taxes to prevent hyper inflation from all the money he is spending. Tax increase is not to benefit you or I, it's to take that money back out of circulation. It's just modern monetary theory. You've all been duped.
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With biden America will be a third world banana republic in no time. The rich will flee. The middle class will evaporate and the poor will wallow in their misery and blame everyone else. You voted for him now deal with it.
Market will not change. Where else will rich people get paid for doing nothing?
All this is fear mongering and you're making the lie worse
BS that the high upper tax rates in from FDR's time until Reagan hurt business. US thrived during those times – ALL levels of the population , not just the wealthy. And there are plenty of data showing that being poor will make you less likely to be happy but once your wealth exceeds a few millions of dollars ,happiness stops increasing. We have massive wealth inequality in this country and poorly funded schools, infratstructure and the like. How does Kathy plan on changing that? More tax cuts? So more companies can buy back their stock?
Lmao . WTF did you all think when Trump gave awsy billions in top 1% taxes 4 years sgo .
I saw this coming . Of course bidens the bad one . No one didnt think this was going to happen . Then you're the fool .
1) Why not include some explanation on capital gain tax…. Being only for ppl who earns over a million dollars? 2) why not mentioning the tax rates we had for past decades? Context matter.
I admire the efforts u put in your videos mate, digital currencies continues to reshape the world globally, its hard for for anyone going against them these days, though from a trader's perspective i feel we really need more experts in the field updating newbies on how the the community works. crypto currencies are gradually moving towards something big and the price surge over the past few months is just the beginning of greater things to come. lots of persons are skeptical on when to buy-in the market and whether it isn't too late to buy an asset, when you're hodling it could be but when trading its never too late to buy. a trader with the right strategy and indicators earns big regardless of market price (bulls or bears). I trade using signals from trade expert Dr. Clara Jones, with is guide and signal service i've made over 9B T C worth of crypto assets over some months. only for crypto inclined issues connect Dr. Clara on teIegram @clarasinvestment ,. mail financialinvestment67@aolCom
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seems like they know exactly what they are doing. allow the crazy run up in markets give everyone the illusion they are making money and take it all back through taxes. either way they get their money back whether it be a market crash or mass taxation. then they raise the taxes and costs on everything else u would spend the money on. any way u look at it they win.
Same as the guy below me….I’ve been taking a loss an no I don’t like Biden’s tax plan especially when high grow companies may have to leave this country in order to move forward…how ironic that Biden has thrown us back as far as progress..