Alex Hormozi: Biden's tax plan.....

The video discusses Biden's proposed tax plan and how it may affect entrepreneurs, breaking down different levels of entrepreneurs and outlining the main points of the plan.

This video by Alex Hormozi was published on Apr 6, 2022.
Video length: 20:28.

In this video, Alex Hormozi discusses Joe Biden's proposed tax plan and how it will affect entrepreneurs at different levels.

He breaks down the main points of the plan, including an increase in the top marginal tax rate, taxation of long-term capital gains for those making over a million dollars a year, and a 20% minimum tax on income, including unrealized gains. Hormozi expresses concern about the unrealized capital gains tax and discusses potential consequences of the plan.

He also talks about how he plans to mitigate some of the effects of the plan.

• Alex Hormozi discusses Biden's proposed tax plan and its impact on entrepreneurs.
• The plan includes increased tax rates for high earners and corporations.
• The corporate tax rate will increase to 28%, and there will be a tax on stock buybacks.
• The plan proposes a 20% minimum tax on income, including unrealized gains, which may discourage entrepreneurship and innovation.
• The unrealized capital gains tax may affect entrepreneurs with a net worth of over $100 million and disincentivize investment in startups.
• Entrepreneurs should focus on building their businesses and do a cost analysis of LLCs and C Corps.
• The tax plan may result in an 80% tax rate for entrepreneurs with high growth companies.
• The tax plan may disincentivize founders and innovators from continuing to grow their companies and drain entrepreneurs of their reserves.
• The tax plan is one of the scariest tax bills ever seen and may bankrupt entrepreneurs and destroy businesses.

Biden's tax plan..... - YouTube

Introduction

• Alex Hormozi discusses Biden's proposed tax plan and how it may affect entrepreneurs.
• He breaks down different levels of entrepreneurs and outlines the main points of the plan.
• He expresses his concerns about some aspects of the plan.

Increased Tax Rates

• The top marginal tax rate will increase to 39.6% after 2022.
• Long-term capital gains and qualified dividends will be taxed at ordinary income tax rates for taxable income over a million dollars.
• This may not affect how people invest, but it may discourage people from realizing their capital gains.
• Transfers of appreciated property by gift at death will be taxed.

Corporate Tax Increase

• The corporate income tax will be raised to 28%.
• There will be a tax on stock buybacks.
• A 20% minimum tax on income, including unrealized gains, will be imposed.
• This may have significant consequences for entrepreneurs.
• Carried interest will be taxed, which may be a good thing overall.

Biden's tax plan..... - YouTube

Unrealized Capital Gains Tax

• The plan includes a 20% minimum tax on income, including unrealized gains.
• This may have significant consequences for entrepreneurs, including reducing their ability to reinvest in their businesses.
• It may also discourage entrepreneurship and innovation.
• Alex Hormozi expresses his concerns about this aspect of the plan.

Conclusion

• Alex Hormozi summarizes the main points of Biden's proposed tax plan and how they may affect entrepreneurs.
• He expresses his concerns about some aspects of the plan, particularly the unrealized capital gains tax.
• He plans to mitigate the effects of the plan on his businesses.

Threats to Entrepreneurs

• Biden's tax plan proposes to increase taxes on high earners and corporations.
• The plan threatens to increase personal income tax rates for those earning over $400,000 per year.
• The corporate tax rate is set to increase from 23% to 28%, making it less attractive for small businesses to operate as a C Corp.
• The plan may affect the ability of entrepreneurs to redeploy capital within their businesses.
• LLCs may be a better option for most small businesses.

Unrealized Capital Gains Tax

• The unrealized capital gains tax proposed by Biden may affect entrepreneurs with a net worth of over $100 million.
• The tax may make it more difficult for people to attain the American Dream and build their net worth.
• The private sector deploys capital more effectively than the government, and the tax may take money out of the hands of those who are good at deploying capital.
• The tax may kill innovation and make it more difficult for the US economy to be at the cutting edge of innovation.
• The tax may cause the US to save less money compared to foreign competitors.

How the Unrealized Capital Gains Tax Works

• The tax is based on a net worth of over $100 million.
• The tax is calculated based on a multiple of a company's earnings.
• The formula for calculating the tax is not clear.
• The tax may affect those who own 100% of a company and have a net worth of over $200 million.
• The tax may disincentivize wealthy people from investing in startups and new companies.

Recommendations

• Entrepreneurs should focus on building their businesses rather than worrying too much about taxes.
• Entrepreneurs should do a cost analysis of both LLCs and C Corps to determine which structure is best for their business.

Category One: Entrepreneurs with High Growth Companies

• An entrepreneur who grows their company from $200 million to $250 million with a 10x valuation would make $25 million in income.
• The net increase in their net worth would be $50 million.
• Under Biden's tax plan, they would have to pay 20% on unrealized capital gains, which would be $10 million.
• They would also have to pay 40% on their $25 million income, which would be another $10 million.
• If they paid all their taxes upfront, they would pay $20 million out of their $25 million in taxes, resulting in an 80% tax rate.

Category Two: Entrepreneurs with High Valuation, Low Cash Flow Companies

• If an entrepreneur has a tech company that doesn't make any profit, they would have to sell stock of their own company to pay the tax on the increase.
• They would have to take loans against their equity to pay the taxes.
• The tax plan would disincentivize founders and innovators from continuing to grow their company.
• The tax plan would drain entrepreneurs entirely from all their reserves.
• Entrepreneurs would have to go into debt to continue to own their company or own less of their company to continue to run it.

Special Caveat: Payment Plan

• The tax plan can be spread over nine years.
• The $10 million could be spread over nine years, which would be like $1.1 million on top of the normal income tax.
• The payment plan will stack up, resulting in mountains of debt in tax that entrepreneurs will have to start paying.
• The tax plan will slowly bully entrepreneurs to the point where it stacks up on top of itself.
• The tax plan will take nine years for these payment plans to stack.

Impact on Entrepreneurs and the Economy

• The tax plan is one of the scariest tax bills ever seen.
• The tax plan disincentivizes the very people who are building the things that grow the economy.
• The tax plan makes the risk that a founder takes on virtually untenable.
• The tax plan will bankrupt entrepreneurs and stack so much tax debt on them for things they have not realized yet.
• The tax plan might destroy businesses because entrepreneurs got saddled with taxes they could barely pay.

Proposed Tax Plan

• Biden's proposed tax plan may affect entrepreneurs.
• Entrepreneurs may have to pay a significant amount of taxes.
• The tax plan may destroy the American dream and go against capitalism.
• The government is not as efficient as the private sector in allocating capital.
• The tax plan may force entrepreneurs to sell their belongings or go to prison.

Unpopular Ideas on Taxation

• Decrease income tax to zero percent and have an enormous capital gains tax.
• Most poor people make money off of income, while most wealthy people make money off of investments.
• Eliminate the transfer of wealth through a 100% death tax.
• Decrease taxes on income and capital gains throughout a person's life.
• Encourage people to work and invest, increase innovation, and attract foreign money to the US.

Benefits of Giving Away Wealth

• Forcing people to give away their wealth may create a world where people become significantly more giving.
• People will privately allocate the money where it's more effectively spent than the government does.
• Privately funded social systems may be more efficient and alternative educations may be available.
• The people who make the most money are passionate about making an impact on humanity.
• Giving those people typically starts caring about everyone.

Conclusion

• Biden's proposed tax plan may affect entrepreneurs and destroy the American dream.
• Unpopular ideas on taxation include decreasing income tax to zero percent and having an enormous capital gains tax and eliminating the transfer of wealth through a 100% death tax.
• Forcing people to give away their wealth may create a world where people become significantly more giving and privately allocate the money where it's more effectively spent than the government does.

Watch the video on YouTube:
Biden's tax plan..... - YouTube