Main Street Business

#530 Tax Lawyers Breakdown Harris vs Trump Tax Plan (FULL DETAILS)

• Mark J Kohler and Mat Sorensen

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In this episode of the Main Street Business podcast, hosts Mark J. Kohler and Mat Sorensen analyze the potential tax changes as the Tax Cuts and Jobs Act nears expiration. They discuss Kamala Harris's proposal to increase capital gains taxes and enhance child tax credits versus Donald Trump's plan to maintain lower rates and extend business deductions. They also cover strategies for family tax planning and corporate tax management, offering tips for adapting financial strategies to these upcoming changes.

Here are some of the highlights:

  • Mark and Mat begin by pointing out how individual tax brackets will increase, while standard deduction will decrease.
  • A breakdown of how Harris will increase child tax credit ($6000 for first year, $3600 for ages 3-5, $3000 for older)
  • Trump’s plan to reduce corporate tax rate to 20%, 15% for US-made products.
  • In-depth look at Harris’ proposal of a $50,000 startup cost deduction for new businesses.
  • How Trump will go about increasing tariffs on foreign corporations and eliminating tax on Social Security benefits.
  • How both candidates support removing tax on tips for workers.
  • Mark and Mat discuss the potential economic impacts of each plan.
  • Importance of focusing on personal financial goals regardless of the election outcome.
Speaker 1:

Welcome to the Main Street Business Podcast with your distinguished hosts, mark J Kohler and Matt Sorenson. Both are best-selling authors and have over 25 years of industry experience, with 10,000 client consultations, making them the leading tax and legal experts in the nation. Together, they'll unpack the most complex tax, legal and financial strategies crucial for saving more, stressing less and building generational wealth. Today they're your personal advisors, ready to break it down for you and make the tax and legal game easier than ever. Here is Mark and Matt.

Speaker 2:

America. In today's video, you're going to have a fair, accurate analysis between the Trump and Harris tax plan from two tax lawyers, and you're going to be able to make an informed decision on the policies. Can we do that?

Speaker 3:

We are going to stick to the facts about. What are the policy differences and how does it matter to you? Is it going to make a difference to you on your taxes?

Speaker 2:

Because we want you to make a decision not based on who I like or who has a prettier face or an uglier face or has a word salad, that sounds wonderful. We want to look at the real economic impact it's going to have in your personal life and to the economy as a whole.

Speaker 3:

Yeah, and I think there's winners and losers, depending on who you are. Actually, I don't think it's the same winners and losers for each party, like you can say I'm all in on this party or I'm all on this party. In terms of the tax plan, I think there's different winners and losers. You might have suspicions of who they are, but we're going to break down the tax plan, so you know how it may affect you.

Speaker 2:

My name is Mark J Kohler. This is Matt Sorensen. We're both bestselling authors, senior partners of a law firm. For the last 15 years, we've both done 10,000 consultations or more helping small business owners around America, and we want you to trust in our thoughts and feelings on this.

Speaker 3:

Yeah, whether you have a family, you're trying to grow and build a business, build your wealth, live the American dream. We're going to be focusing on that as we go through the policies, because these tax policies may affect each of those things in your life the American dream, your business or your family, and we're not going to be talking about social impact or immigration.

Speaker 2:

We want to talk about Main Street America, middle-income Americans and what do all these numbers mean and what likely might happen in your bank account? We're not for sure either, but we're going to give it our best shot.

Speaker 3:

Now, before we get into the specific proposals between Trump and Harris, let's talk about where we're sitting right now. The Tax Cuts and Jobs Act is going to be expiring at the end of 2025. No more tax cuts from that Tax Cuts and Jobs Act. So let's break down each one of those.

Speaker 2:

that's going to be going away and I think it's important to recognize that that was the largest tax or economic legislation in almost 30 to 40 years, since Ronald Reagan, and it had some impact, some good impact generally, and it was also built to expire. That's a whole other topic of why, but we have to keep that in mind, because whoever's going to be the next president is going to have the opportunity to propose keeping things or getting rid of things. But oh man, oh, some of it is so good. What are we going to?

Speaker 3:

lose. Let's start with the individual tax brackets, because this affects everybody. When these rates expire in 2025, everybody's bracket is going up. The highest rate is going to go from 37 to 39. And no matter where you are you're in the lower income or middle income your tax rate is going to go up, Number two, we remember that standard deduction thing.

Speaker 2:

Let's make it simpler for filing the standard deduction now. This year is well over $14,000. Next year will be adjusted for inflation as well, but after 2025, we could see the standard deduction go back to five, six or $7,000. That's going to have an impact. And then we see the itemized deduction train come back as well with SALT, which some argue is good or bad. It actually these changes favor the middle income and I think higher income individuals would love to see SALT come back.

Speaker 3:

So what is SALT? How would you define it? So SALT is state and local tax deduction. So, for example, if you pay state income tax or local taxes, even property taxes, you can take a deduction on your federal tax return. Now, who pays the most state income tax? High income people. And so they capped it at $10,000. And so now that cap is going to go away. So if you're a high income earner, this actually hurts you. If you're lower or middle income, you're likely not paying over 10, go away. So if you're a high income earner, this actually hurts you. If you're lower, middle income, you're likely not paying over 10,000 anyways.

Speaker 2:

So it doesn't really hurt or help you. And we're going to talk about president, former president Trump, and his position on what would be extended if he were to be reelected. And let me just say again, we're telling you where we're at now. President Trump and Vice President Harris have both said what they would like to see happen here, but we're just kind of telling you that a lot is phasing out. Another one is this child tax credit.

Speaker 3:

Yeah, I mean that went from $1,000 to $2,000 on their tax cuts and job debt, which is huge. This credit can be refundable, benefits a lot of people who have kids and families. Now, both Harris and Trump have plans for this, though, so as we get into the new plans coming out of this, make sure you're paying attention to child tax credit, particularly if you have kids or you're planning to have one.

Speaker 2:

Yeah, now another tax provision is the bonus depreciation. It used to be 100% under the Tax Cuts and Jobs Act and has been slowly going down. So we're going to see that get back to, I guess, reasonable levels if you would like to say that. But if you're a small business owner and you were buying equipment or you're a real estate investor, there was some segregation depreciation strategies that were pretty cool. Those will be phasing out as well.

Speaker 3:

Now. One of the other changes was the estate tax exemption. You got a larger exemption when you passed away of whether you had to pay estate tax. So when my heirs got my assets after I passed away, my kids got an inheritance, did they have to pay the federal government. That exemption was expanded and is currently sitting at around $28 million for married couples, $14 million for single. That is going to get cut in half if the Tax Cuts and Job Debt is not extended. So at the end of 2025, that is going to be cut in half 50% reduction.

Speaker 2:

Well, I take issue with that. I thought I was going to get some inheritance. It's all going to your kids. This is news to me.

Speaker 3:

For my inheritance. You're not in the will.

Speaker 2:

Man, this kid's a killer All right, you're just the trustee. You get nothing. I hope I get paid for that, all right. Now the last remaining tax strategy that will phase out here in the next year and a half is the opportunity zone strategy. I should also say there's the work opportunity credit. There's so many little things in there, but these are the ones affecting again main street America, and so the opportunity zone tax strategy was being able to sell property or some appreciated capital asset and rolling that into real estate to defer on the taxes. That's going to go away as well. So let me just say this In general we've got a lot of strategy sunsetting, which now it's kind of, in a good way, gives us a chance to take a fresh look at former President Trump and Vice President Harris's strategies moving forward, and it's a big deal. It's not like oh, no matter who gets elected, things are going to stay on a train track here. No, we're going to have a whole new train on a whole new track, no matter which president gets elected.

Speaker 3:

And we need to note one other thing, because there was some stuff that was made permanent in the Tax Cuts and Jobs Act. You might think this is unfair. I didn't like that. This was the one thing that was permanent Corporate tax rate to 21% max rate. That was made permanent. All these small business tax deductions, all these individual tax deductions really helping the people on Main Street expired in 10 years. We're coming up on that in 2026. The big corporate tax deduction, the corporate tax rate for the C Corps, not small business. Small businesses don't use C Corps. They got a permanent reduction.

Speaker 2:

Now these are fighting words what Matt is talking about, because eight years ago, when these were passed six to eight years ago we fought over this. At that time too, the reason why corporate tax rates were permanent was there was a lot of laws passed to get corporations to bring money from offshore back onto US soil in order to get that benefit. The second point is all of these individual and small business tax cuts had to be income or cost neutral over a 10-year period. So it was very difficult to make a lot of these small business individual tax cuts permanent because they were going to cost us far too much in the long run. We had to make it revenue neutral in 10 years, which I guess in some ways could, I'm going to argue is a good thing, because we get to revisit it what worked, what didn't work.

Speaker 2:

We get to look at it.

Speaker 3:

Yeah, I mean they could have done it another way and said let's just make permanent the individual and small business tax credits and we'll only set a 10-year window on the corporate tax breaks. Well, woulda coulda shoulda.

Speaker 2:

Okay, all right Now, some of you may not think this is a laughing matter, but this can be a very complicated and an emotionally charged topic, and so hopefully you're appreciating a little bit of joking here and a little bit of history going back over what happened and what didn't happen. Please keep your hackles down and just let's look at this pragmatically as much as we can, because it is such a difficult topic. Okay, I'm going to set the rules for our conversation, or one might say debate.

Speaker 3:

Okay, so you have to abide by these rules. Are you going to turn the mic off when you're?

Speaker 1:

speaking, are you?

Speaker 2:

going to turn my mic off, okay, so what we're going to do is try to choose a topic and see if we can compare one candidate's approach to that topic, like capital gains. Maybe we could start with that. So we're going to compare both candidates' approach to capital gains. Now there's going to be other topics that some one party hasn't really offered an alternative, but we'll get to that. So maybe we talk about capital gains in each candidate's approach to that and then see if we can figure out pros and cons.

Speaker 3:

Yeah. So let's start with vice president Harris, where she came out, because right now the long-term capital gains rate is 20%. She wants the maximum capital gains rate to be 28% Now and she did get some praise for that. I will say I'm like wait tax is going up.

Speaker 2:

You got praise for that. The praise was it could be worse.

Speaker 3:

It could have been worse. We could have had Biden's proposal on long-term capital gains, which was in the 30s. It was not 28%, and so that is where Harris is coming in. This is long-term capital gains rate of 28%. This will apply to your stocks. You're selling real estate crypto a business. 28% is the max rate.

Speaker 2:

And I think a sister to her proposal is we want to tax unrealized capital gain. So if you are worth more than a million dollars and you've got this gain sitting over there, we're going to tax it, even if you haven't sold the asset or the underlying asset that has the built-in gain. All right, pros and cons.

Speaker 3:

Well, let's say, on the unrealized gain, though the unrealized gain and I hate this as a concept in tax because it's like, wait a second I own an asset that goes up in value Think of your home, your stock portfolio and I haven't realized the gain. I've just let that asset appreciate and I got to pay taxes appreciates over time. It's a dumb idea and concept, in my opinion, because you haven't realized it yet. Yeah, it's like.

Speaker 3:

But let me say you have a pro, I was going to say but her plan doesn't apply except in like the tens or hundreds of millions of dollars, so it's not going to affect most people. But my problem with that is this is a terrible concept. If it's bad for me, it's bad for people making lots more zeros behind what they're buying or selling, and you think that's where they're going to stop. That tax concept is going to keep trickling down and down and down and down to other income brackets because what does the government do? They spend more money than they make.

Speaker 2:

Yeah, and have you ever heard the concept of slippery slope Meaning? If we allow this concept for the uber wealthy, it'll only be a matter of time until they start bringing it down to your American dream. And you want to have this dream of building this deferred wealth and all of a sudden you get taxed on it. And we'll talk about some pros here. This is not about just beating up Vice President Harris. Here we're going to hit pros and cons on both sides.

Speaker 2:

But my other issue with this is that I'm a retiree. I've been saving my whole life and I've been building up this asset. It could be a second home, a farm, a ranch and it's got this built-in gain. I'm going to get taxed on it. This goes back to I have to sell the farm to pay the tax. If I don't have cash sitting over here to pay this built in gains tax, I'm now being forced to sell the asset. So I think we can both agree not a good idea. And when you try to increase capital gains tax, it's also discouraging investment. We want to. This would be. The second argument here is that generally, republicans are about let's create more wealth in our economy, let's invest in the economy, let's build wealth, and if I'm going to get taxed capital gains rates that are equivalent to regular income rates, why am I going to invest? I'm just going to go out and make money, but we want to create investment in infrastructure, in small business and growth. Now, is there a pro to this? I guess it increases revenue.

Speaker 3:

It increases revenue, which will pay for other tax credits that Harris has. That we'll come back to Buying a home, and child tax credits will have big benefits under Harris's plan. So we're going to come to that in a second. But she's got to find a way to pay for it and, shocker, how are you going to pay for it? We're going to tax the rich, the people making money.

Speaker 2:

Yeah, this goes back to the age old, where the government giveth, the government taketh away. You just want to be on the giveth side, not the taketh away side. So that's how that basically works. So that's how that basically works.

Speaker 3:

So where's Trump? On the capital gains rate, though? Let's let's state that, because tax cuts and jobs act. Some people call this to Trump's tax cuts. That is where we're at now, which is the 20% long-term capital gains rate, and Trump has said he's wanting to extend, basically, tax cuts and jobs.

Speaker 2:

So yeah, that's right. Trump wants to discontinue this same extend what we've already been seeing happen for the last 68 years, which hasn't been a bad thing.

Speaker 2:

We can estimate it.

Speaker 2:

We know that max rate's 20%, that we have the Affordable Cares Act tax and we have state income tax in some situations. So this is a tough one, but I like what you said. If Vice President Harris wants to benefit certain segments of our citizenry with some tax credits, we've got to be able to pay for it. So that would probably be. The benefit of this tax is that it's going to allow her to create some subsidies or handouts or tax credits somewhere else. But no change on the Trump side on this issue. No change. All right, let's talk.

Speaker 2:

Small business. This is my tribe. I love you, I love small business, I love building wealth, I like people that have an idea and can create it, and so I'm going to let's talk about Vice President Harris's approach to this, and I give her credit for this. If we want to stimulate the economy, let's reward a small business owner that wants to invest in a new small business. So, if you've heard about this, she wants to increase the startup cost deduction. Now, this is not a tax credit, it's a deduction.

Speaker 2:

Currently, the law is, if I start a small business and I spend $5,000 getting this business off the ground, I can immediately deduct that five grand. Anything over five grand I've got to amortize or, some might think, depreciate, write it off over time. It's currently 15 years. So if I spent 10 grand starting my new small business, I get a write-off five and I have to amortize the other five. She's like uh-uh, we want to stimulate the economy, we're going to let you write off up to 50 grand. Never heard of this. This is like well, let's 10X it. That's cool, that's fine. Sounds good to me, I'm for that, I like that, and so I've got to say that's the good thing. The bad thing for me is there's 70 million small business owners out there already with small businesses. They've already started. They don't get this right off. This is if you start something fresh, completely new. So if you're a small business owner, this means nothing.

Speaker 3:

Yeah, this is like the company that offers a new discount or pricing model for new customers, but existing customers are still screwed. You get the old pricing and you don't get the new benefits. And so so what is there for existing small business owners under her policy? Not much. Maybe some trickle down to you at the individual level, so let's talk about that. There could be some wins there, but at a business level, for an existing small business owner, I don't see any other tax breaks or benefits under the Harris tax plan, because if we counter this with Trump under the Trump tax plan, one of those things expiring and you mentioned a moment ago QBI, qualifiedified Business Income. This was a huge win for small business owners where you got to take a 20% deduction. This is expiring in 2025. That'll be the last year you get this. Trump would be extending this because this is part of his original plan when he was president last.

Speaker 2:

Yep, and if we stick with small business? For a moment, let's keep our head around this. Vice President Harris has said I want to help you with startup costs. That's all we've heard so far. Former President Trump has said I want to extend this 20% deduction off your income, whatever you make. Take 20% of that. Write it off your personal tax return.

Speaker 2:

Number two let's extend bonus depreciation. If you go out and buy a piece of equipment, or even a vehicle, a car or a truck for your small business, the prior bonus depreciation 100% insane. Also, the work opportunity credit going out and hiring individuals in certain zones to help create jobs. We get to keep that. And we have the opportunity zone where I can defer capital gains, which relates back to the capital gains issue. I guess President Trump wants to defer capital gains further by taking your profits and creating affordable housing and rebuilding areas of America that need re-infrastructure, building so super powerful small business tax strategies that we want to see extended. So we'd be asking Vice President Harris if you're really serious about small business, give us something. That's all you got the startup cost. I'm going to be tough, but that's the economic takeaway if you're a small business owner.

Speaker 3:

Yeah. So to sum that up, if you look at Harris's plan, a nice perk for new business owners with that 50,000 startup deduction that you can get is 16 small business owners. Not much help there. But under the Trump plan we have QBI. This is his original tax policy. Under tax cuts and job deck, you get a 20% deduction. If you made 200 grand that year, you get a $40,000 deduction on your income. You're only taxed on 160. That's what QBI is. It's in place now, but it'll be expiring in 2025. So this is something Trump will be bringing back in his plan.

Speaker 2:

All right. So let's go back to Vice President Harris and some other proposals that former President Trump is either silent on or a little softer. For example, this child tax credit. Vice President Harris has come out and said we want to give you six grand. It doesn't phase out until you make 200 grand single or 400 married filing joint. That's a big deal. That would be a wonderful boon for those of you that want kids. Just remember they're going to be teenagers someday. Did you like we've had teenagers? Is it worth six grand in tax credit?

Speaker 3:

That's the other. Give me a lot more than that.

Speaker 2:

No, but you know we're not doing it for the money, no, but this is a wonderful benefit for those out there that want to have a family, want to build a family. Vice President Harris has come out and said let's make it legit, let's make it serious. President Trump is like let's keep it where it's at.

Speaker 3:

Don't get my take on the child tax credit, because it's $6,000. That's for the first year. By the way, that's for a newborn up to one year of age, because they there's a lot more costs in that you have a kid, you have a newborn, you're buying all this stuff.

Speaker 3:

You know diapers formula all that Okay 3,600 per kid from age three to five, and then it's 3,000 for any over the age of five. All right, so that's where it's going. So I want you to think I got you know a bunch of teenagers and I'm going to get 6k per kid. No, it depends on where they're at here, but here's why I like it. This is a policy thing. For a second, here is who's going to be paying social security for me? We have a problem in our country right now People aren't having kids. You know why. It's expensive, and we do need to think about how, as a government, are we going to afford to pay for social security and all the other benefits we have?

Speaker 2:

We need a bunch of little payers.

Speaker 3:

We need a bunch of payers into the system. Vice President Harris wants you to get busy.

Speaker 2:

Now this is my proposal for Vice President Harris, if you hear me here. Let's just turn your plan around. When you have the baby, you get a thousand dollar tax credit. When they're a toddler, maybe two to $3,000 that year. When they become a 12 year old and a teenager, that's when you get the six grand, because that's when you need it. That's when it really hurts. So I just flip it around. That's an interesting take.

Speaker 3:

That's an interesting take. Now I want to make a couple other points on the child tax credit Right now. This was Trump's proposal. It went from 1K to 2K. Under Tax Cuts and Jobs Act, we're seeing it $2,000 per child, doesn't matter the age.

Speaker 2:

That's what Trump wants to extend is stay on that $2,000 per child. Yeah, and the Tax Cuts and Jobs Act was actually pretty robust regarding the child tax credit and Trump's like it's not broken, let's not fix it, let's just keep it and maintain it. So Vice President Harris has said let's ramp it up, let's three exit and really help these families with children so great proposal would help out anybody with a family. And you're right, let's keep. Let's get our population growing.

Speaker 3:

That's right. We need more babies. And the phase outs are nice on it too 400,000. You don't phase out on it until 400,000 annual income for married. 200,000 single.

Speaker 2:

All right, now let's talk about tips. Now this is kind of a precarious one, because we heard Former President Trump come out with this first. He's been out on the trail quite a bit about we do not want to tax tips, and that's a great proposal. That's good for those that are out there working that second or third job and trying to make ends meet. And then Vice President Harris gone on the bandwagon and saying I'm on board with the same proposal and the same strategy. So I don't know if there's any difference there and I don't want to give one of them more credit than the other for thinking of it first. They both want to reduce or eliminate the tax on tips.

Speaker 3:

You know and I think that's a great idea. That is such a good idea Most workers that are getting tips should not be taxed on that. Anyways, it's gratuity and, let's be honest, most people aren't tracking that and paying it, so the government isn't going to see the money. Anyways, are people really tracking their tips? I know, when you're paying on a credit card, sometimes they have to. That's been one of the phantom areas of tax, anyways, whether it's being claimed or not, and so I think it makes sense to get rid of it. Also, trump came out and said no tax on overtime. That's right.

Speaker 3:

That's right, and I don't know that we've heard from Harris on that yet this is more recent. We're cutting edge here. But no tax on overtime pay. Now, if your salary it doesn't matter, you're in that salary bucket, but for any of you who are on an hourly pay, no tax on overtime, yeah.

Speaker 2:

And I'm going to let's digress for one moment here and I'll be a little hard on both candidates here for a moment. When you're out on the trail, you can pretty much say whatever the hell you want on what you're going to try to do with tax planning, because saying it on the trail, getting elected and then getting it passed through Congress very different things, and it's a good chance we're going to have a split Congress here and it's going to be difficult for either president to get through all of their wish list when it comes to these tax strategies. And let's get real here too I don't think there's any newsflash here that these policies are something we haven't seen before.

Speaker 2:

Republicans want less government, less regulation, less tax and let Americans build their own future, their own economic success and small business owners. That resonates with them. On the other hand, democrats are like hey, we can manage your money better than yourself. We'd like to take care of certain social benefits, help some of those that don't have the resources small business owners may have. We want to create a little more equality. And the rich? They don't need all that money anyway. Let's help some people that really do need it. And there's nothing wrong with that either there are two separate policies in effect and then what they can pass in laws to make that happen. That's kind of what Republicans and Democrats are about generally.

Speaker 3:

Yeah, and this is a contrast whether you look at it at the business level, the individual level families and these child tax credits we've talked about. Level, the individual level families and these child tax credits we've talked about. This is the contrast between Trump and Harris, and where Harris is winning in this tax summary, in my opinion and we're going to hit a couple more here still is she's trying to say families, lower income, middle income earners wants to hire child tax credit, want to talk about the homeowner credit. Here Trump is more on the side of hey, I want to stimulate the economy, I want to create more jobs, I want to let small business continue to grow and foster. I want large companies to even grow and pay less tax.

Speaker 2:

Now, as we kind of wrap up those business tax strategies proposed by both candidates, let me give an example of a comparison on what it might look like practically. Now you can use the fact patterns in different ways to benefit maybe one candidate or another. But let me try to be as neutral as I can on this. Let's say you have a landscaping business, you have someone that wants to start one and you have one that currently has one. And to go out and start this landscaping business you're going to buy a truck, maybe you knew or used, and you're going to buy a trailer. You're going to buy a truck, maybe new or used, and you're going to buy a trailer and you're going to buy some lawnmowers and all the equipment that goes with the landscaping business. Well, under Vice President Harris's plan, she wants to give you a tax deduction not a credit that you can write off up to 50 grand of whatever you spend out there. Now if you spend less than 50 grand, you'll be able to write off your whole startup of your new landscaping business in the first year. That's great. If you spend more than 50 grand, you're not going to get a write-off for anything over 50. You're going to have to amortize that over time. Now let's say you have currently a landscaping business or you spend more than 50 grand. The extension of the Tax Cuts and Jobs Act of the bonus depreciation, which is a big one, means that I can write off all of that equipment, including the truck, no limit. There was no limit on the bonus depreciation deduction. So if I spend $70,000, $80,000, or $100,000 getting that business off the ground, I can write off the entire amount. It's not just limited to $50,000. Oh, and that landscaper that's currently in business that needs to expand and grow and buy additional equipment 100% deduction of anything they buy. Moving forward under an extension of the Tax Cuts and Jobs Act, the $50,000 startup cost nothing. So I want to applaud and say thank you to Vice President Harris on helping people that want to start a small business. You get a bigger tax deduction in that first year, but it's just a narrow exception for just a small segment of our economy when there's already 70 million small business owners that won't get to use that. So I just want to try to provide a fair analysis of some fact patterns of what that might look like.

Speaker 2:

Okay, let's hit a couple strategies where the other side has been silent. First, social Security Former, president Trump has said I don't think Social Security should be taxed. It's pretty cool. We already have problems with the Social Security system. A lot of people are scared to death about it running out and if you're living on Social Security, having it taxed is like adding insult to injury. Now he's going to have to pay for that, just like we were talking about a moment ago that vice president Harris is going to have to come up with ways to pay for her incentives. But that's pretty cool, I think social security people living on that they're already in a bad way and not taxing it kind of cool thing.

Speaker 3:

Yeah, I think a lot of people are surprised when they hear wait a second. The government took the Social Security money from me, invested it poorly, gave it back to me 40 years later and I have to pay taxes on it. No, how does this work? Okay, and so this is Trump's policy? It's like you don't pay taxes on your Social Security benefit. The government's sending you a check. It seems ridiculous to then have to send them money back because they sent you money.

Speaker 3:

So, I get that. That makes sense. It actually simplifies things Totally makes sense. Let's talk about people trying to buy their first home. This is a big problem in our economy right now. We've had real estate prices go up. Interest rates are high. It is the most unaffordable time to buy a home Now. Harris's plan includes $25,000 in down payment assistance to buy a home up to a purchase price of $715,000, plus a $10,000 tax credit. That is a big proposal. She is out there campaigning on trying to increase home ownership and make it more affordable for middle or lower income people to afford to purchase a home. All right.

Speaker 2:

Now I think this is a bad thing, because if we can create more demand and throw money into the market to get into a house, what do you think is going to happen to the housing prices that are already too high? We are going to see. Interestingly, home prices continue to go up, in fact, maybe to the rate of about $25,000,. Whatever that home price is, putting more money into the system is just like during the pandemic let's throw money at the system and hope solves it, when what we're going to see is more inflation, home prices go up and we're right back where we started.

Speaker 2:

Why don't we try to go out and create incentives for development in rural or even redevelopment in urban areas, creating more inventory rather than greater demand on the already existing low inventory? If you want prices to go down, let's create more inventory, not throw more money at it to create a higher demand and price. So I get the idea. I like what she's trying to do. I want people to buy their first home, but just throwing money at it doesn't solve the problem. Let's create more inventory. Let's get a little more strategic, a little more surgical about solving this housing problem in America.

Speaker 3:

Yeah, I mean the great point, because we do have a supply problem. Right, it's like supply and demand. That's why our prices have gone up and we're going to create more demand and we have crappy housing supply. Now Harris does have a plan. It's an innovation fund, is what she's called it. Forty billion dollars that will go to local governments to make it easier for them to provide local housing at the local level, and also they're going to provide access to development for on federal, which is a pretty big deal, to allow for more affordable housing.

Speaker 2:

Well, and I think that's great. We need more supply, so if she can pull that off, that would be great.

Speaker 3:

Now there's not a lot of detail in that this is a very broad stroke type policy proposal out there. But she has got a counterpunch, at least I'll say, to the. We've got a supply problem, not a demand problem necessarily. Let's create more supply of homes that will bring down the cost and make it affordably naturally in the economy, instead of just shoveling more money into the economy like we did back in COVID Exactly right.

Speaker 2:

If she's going to adopt one of those proposals, let's go with that one. Throwing money at the problem only makes it worse. Let's try to create more supply. That'll bring down housing prices, which is better than a handout. And again, this would fall into the opportunity zone tax credit, which we want to see extended anyway. That's what the opportunity zones are about, and they've been around for 10 years, so let's keep that. Yeah, but opportunity zone didn't help me to buy a house.

Speaker 3:

This is why I like at least this process or this policy that is targeted at someone trying to buy their first home. That's a big freaking deal. It's part of the American dream. We want to make it accessible and available to people. The same thing as the mortgage interest deduction. Right, the home ownership mortgage interest deduction that we have makes it more affordable to buy a house instead of renting, because I get a tax deduction over here when I buy a house. I don't get a tax deduction when I'm paying rent, and so I think some of these incentives are good. I like people to have ownership of their home. It gets them invested in their community.

Speaker 2:

Yeah, fair enough, I'll own that the opportunity to zone tax credit was for commercial and for business rental property, not for personal home ownership, so but let's just not throw money at people to buy what we already have a problem of which is current supply. Yeah.

Speaker 3:

All right, a couple of last points here. We left the corporate tax rates for last, because who cares about big business? But it does affect our economy. Here we want to hit small business and individuals first. Corporate tax rate under Harris is going to go to 28% Now. Right now the max federal corporate tax rate is 21%. Trump's plan is to go to a max 20% rate and a max 15% rate if you make your products in the US.

Speaker 2:

And I think a related point to this is Trump wants to increase tariffs on foreign corporations selling in the US. So he's I like both parties here trying to do something. The problem with both candidates on this issue is that trickle down to economics, meaning if we increase tax rates, even on foreign corporations or on domestic corporations, it's going to increase prices at the register. So I like reducing corporate tax rates, which the Republicans would argue injects more capital into our system. The Democrats would say no. Corporations never take that money and give it back to us. Let's increase taxes on them. It's a very socioeconomic policy that is hard for, I think, the average American to understand, except higher inflation and higher prices.

Speaker 3:

Yeah, let's keep in mind. This is C corporations that pay corporate tax. This is not you LLCs or S corporation owners, you sole proprietors. This has nothing to do with you. This is for the big corporations that use C-Corps.

Speaker 2:

The thing that I will say is that I do like corporations paying their fair share. I'm not a big fan of Wall Street. I never have been. I love Main Street America. So if, Vice President Harris, you want to tax corporations more, I don't have a problem with that, except it's probably going to increase prices at the register and impact inflation. What I do like about former President Trump's plan is, if we're going to tax a corporation, let's tax those foreign corporations and let's buy American and let's in fact reduce tax rates on American corporations. Fundamentally for me, I like that and, yeah, it may increase some of the prices of products on the shelves that were foreign made. Well, go buy American. That's my take.

Speaker 3:

Yeah, I mean there's a lot of policy behind those decisions. I mean that tariff issue, and think of all the stuff we're buying from China. I mean we have a lot of stuff from China, guys.

Speaker 2:

And you're right, matt, it's true that corporations that are manufacturing in the US where do you think they buy? A lot of their supplies they're going to be buying from China, even though they manufactured in the US. Maybe there will be trickle down effect for us as Americans, or inflation, or inflation. More inflation.

Speaker 3:

That's what we're going to have. And then what's the Fed going to do? Keep rates high, and what does that mean? Homeownership's expensive and we get in this cycle. And what does that mean? Homeownership's expensive and we get in this cycle. And how's that going to turn out for us? I don't know. We're going to have to have the government give you more money, give you more down payment assistance to afford a house. So I don't like it.

Speaker 2:

I don't like tariffs, I'm a free market guy. Yeah Well, in between the two candidates President Trump wants to increase the taxes or the tariffs on foreign corporations, vice President Harris wants to increase the taxes on all corporations. And then where? How's this all going to level out? Maybe it's a neutral washout, I don't know.

Speaker 3:

Yeah, who knows, you can always find something bad with any policy. That's the great thing about government and politicians, right, there's something that I'm not like about all of them.

Speaker 2:

I love this presentation because we just get to backseat, drive and crap on anything we want.

Speaker 3:

Yeah that's pretty much our job. All right, let me try to summarize some pros and cons on the Trump versus Harris tax plan. Now, harris has some great plans and is focused on home ownership for first-time homeowners. She's focused on new business owners with $50,000 startup deduction and I think she is focusing on the families, on families and having children. Okay, the $6,000 tax credit for the first year and she's increasing the 2000 to 3,600 and 3000, no matter the age of the kid. That is a huge benefit. A lot of people can benefit from that. Now where's Trump winning? Capital gains rates are going to be lower. Corporate tax rates will be lower. Domestic corporations are going to have a benefit because foreign corporations are going to have tariffs, particularly China. Social security benefits aren't going to be taxed.

Speaker 2:

And small business.

Speaker 3:

And small business. We're going to get QBI, we're going to get bonus depreciation. All those tax cuts and job benefits are coming back if Trump is reelected. And so when you look at these tax cuts, you're going to look how does it benefit me? And think about how does this benefit the economy around you. It's not just about you. It's the country you want to live in and the economic system you want to be in in the future as well. What is your American dream? How does that look for you? I think if you look at it in perspective, you can make your decisions there.

Speaker 2:

I love it and I don't even want to try to restate what you said, because that was fantastic summary. What I want to say is, folks, whoever gets elected, the sky is not falling. The American dream is still alive. This is not a decision that is going to decide whether our country blows up on November 7th. Stay calm, invest on, continue to save, get out of debt.

Speaker 2:

Yeah, if you meet certain criteria or a certain demographic or fact pattern, one candidate might benefit you over another. But sit back and go. What is your master plan? Where are you going with your investments? What is your economic goal from an investment standpoint or a small business standpoint? And just have faith in God and can you do? Work hard and be patient. To try to think that one of these candidates is going to solve all your problems is not realistic, but their decisions will impact your bottom line, based on your fact pattern and what you've got going on in your life. Try not to get emotional about it. Stick to the policies. What is it going to mean? And hopefully you can make a better decision when you take that approach.

Speaker 3:

Yeah, and I want to let you know that our team at KKOS Lawyers has the ability to look at your tax situation, make a plan for you, make an organizational diagram, make an implementation plan to try to save taxes. There's a ton of great tax strategies, no matter what president is going to be in office, and we want to help you. Make sure you only pay the taxes that you have to.

Speaker 2:

Well, and under both candidates' proposals, no one is going to be touching the Roth IRA or the Roth 401k and real estate tax strategies. This is a great opportunity to still build your wealth. Social Security is not going to cut it for you. It's not going to cut it for anybody, so try to build your own wealth through strategies that are completely tax-free. Both Vice President Harris and former President Trump want you to invest in your Roth IRA and invest in what you know best. We've been doing that for 15 years. Here you can go to directediracom and open an account today and start saving and work on getting out of debt and building your own wealth so that you're not dependent on the government, no matter what political party you're in. If you're looking for a tax advisor, a tax strategist that can help you get through this massive strategy this year and years to come, please get over to our TaxPro network. It's at markjkohlercom, the link's down below.

Speaker 2:

We have been training tax advisors all over the country for the last two years. They're trained on 80 different strategies. They meet with us weekly for training. We learn from them. The tribe and community is amazing, so you can go to that network and find a strategist near you across the country, wherever that can help you through this crazy time. Now, if you are already an accountant, enrolled agent, cpa or certified financial planner or an attorney and you would like to be certified as a Main Street Tax Pro, please click on the link down below and do a demo. See what we have to offer 12 modules, 80 different classes and ongoing trainings to help you get clients like the ones we want to send you and to help you up your game in your tax advisory practice. And once you get certified, you can be on our tax advisor network. We want to help Americans all over the country find the right tax strategist for them. The American dream is still alive and well and together we can make it happen.

Speaker 3:

Yeah, and I think, no matter who's in office whether it's Trump and all the tax strategies that need to be implemented from Trump, policies that help small business owners, real estate investors, individuals or you're looking at the Harris tax plan. Some of the new proposals she had that haven't been in the tax code before, and I'll say it higher tax rates, which. What does that mean? Tax planning is more valuable to you. It's more important to you when tax rates are higher, and so getting a handle on this is important. Make sure you've got the right tax advisor. If you're someone looking to learn those strategies and stay on the cutting edge, get over to the Tax Advisor Pro program by the great and powerful Mark J Kohler.

Speaker 2:

And I want you to remember, our mission is to help every small business owner in America live their American dream. We value the American dream. We value entrepreneurism and these incredible freedoms we have in our country. This opportunity is available to all of us and with a little bit of learning and hard work you can have it too.

Speaker 3:

Hope you found this podcast insightful. Please make sure you're subscribed either on YouTube or on the podcast app You're listening to this on. Give us a review if you've loved it and if you didn't like it, you can tweet at the candidate that you didn't like and we'll see you next time. Thanks, everyone.

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Mark J. Kohler

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