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Biden vs. Trump – How The Election Will Affect Your Business! - YouTube
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[Music]
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so in my last video we talked about
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the impact to your personal income taxes
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from the election but now let's talk
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about
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the impact for business income taxes
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hi my name is chris passmore and i'm
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with cpa corner
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so we're going to focus today on the
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impact to
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businesses corporations and a result of
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each candidate's
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tax policy that's been proposed so far
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so there's four main areas we're going
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to talk about so let's start this off
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let's just talk about the corporate tax
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rate
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under the tcja the new tax law that
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was issued a few years ago under the
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republican administration
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the corporate tax rate was reduced to 21
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percent
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and president trump has shared that he
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would like to
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reduce this rate to 20
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and this is a stark contrast to
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candidate biden
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he would like to increase the
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income tax rate for corporations from
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21 to 28 percent
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and in addition to that he would set a
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minimum
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tax amount for large companies
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which he defines as companies with book
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income in excess of 100 million dollars
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and that minimum tax would be 15 percent
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and you may be asking yourself how is
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that possible how do you have a large
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company
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with tons of profits paying less than 15
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percent
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well there are a number of companies out
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there that
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either have offshore or foreign
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operations
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or who take advantage of various tax
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credits that are available to them
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this is particularly relevant for
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technology companies and the
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credit for research and development and
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by having
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their operations in foreign countries
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and by taking advantage of certain
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credits they can bring down their
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effective tax rate
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to an extremely low amount you might
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have heard this being referred to as the
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amazon rule
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and the effect that
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the possibility that you can have
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hundreds of million dollars billions of
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dollars in income would pay
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virtually no tax an example of this
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would be netflix
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it was reported that in 2019 their
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overall effective
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income tax rate was 9.5
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percent so under candidate biden
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that would now be a minimum amount of
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15 percent so a big change
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in the overall tax rate proposed by by
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each candidate
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so next let's talk about deductions
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these are the expenses that you can
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use to reduce your taxable income
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right now president trump's policy
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includes a lot of extensions of the
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existing
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benefits in place many of the things
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that he's rolled out in the past years
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had expiration dates so things like
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bonus depreciation
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and he would like to extend that out or
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make permanent
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and one item that he did state he wants
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to expand and increase the amount of
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items
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eligible for deduction focused on meals
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and entertainment
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that was one significant change that's
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happened in the past few years where
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companies were seriously limited in the
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deductions that they have for meals for
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you know networking opportunities
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prospective clients
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or entertainment venues and it sounds
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like president trump would like to
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expand that
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and allow companies to get additional
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tax deductions for those amount
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the main deduction change that i've seen
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for candidate biden
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relates to the deferral of capital gains
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tax
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for real estate investments and this is
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called a
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like-kind exchange or a 1031 exchange
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and how the current tax law works now
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if you're an investor and you buy a
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real estate piece of property you have
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the ability to defer
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any gains any capital gains you have on
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that property
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if at sale you then use those proceeds
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to buy a
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new real estate investment that is
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similar in size
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so instead of paying the tax on the gain
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from
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property one you roll that over to
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property two
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and then you don't have to pay tax until
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property two
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is then sold canada biden would like to
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go ahead
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and eliminate this deferral of capital
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gains
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for certain high income investors that
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means when they sell
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property one they would have to pay
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those taxes right away
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even if they plan to roll that
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investment into a new piece of property
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so that would be completely eliminated
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for high-income earners so the next
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area that i want to talk about is for
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international businesses
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and the primary thing right now that
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could change would be under candidate
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biden's plan
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to double the guilty from 10 and a half
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percent to 21
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so you're probably asking what's the
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guilty so
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the general concept here is there are
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us entities that have certain
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operations offshore to take advantage of
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lower tax regions for example ireland
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you might have read that if you operate
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in ireland
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the tax rate there is roughly 12.5
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so the the guilty is the concept of a
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minimum tax on
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global income and right now
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that minimum tax is ten and a half
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percent and
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candidate biden would like to double
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that amount to
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21 and thus impact companies like
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apple that do business and have
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all these foreign enemies across the
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world
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the last major item i wanted to talk
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about today is
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in relation to income tax credits right
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now
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president trump has not announced any
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significant changes to the current
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tax on place for income tax credits but
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candidate biden has proposed several new
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or enhanced credits
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primarily focused on low income
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work opportunity tax credits child care
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tax credits
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and he would like to roll out several
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new items to benefit
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those parties and it's a focus on
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again low income investing in lower
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income areas child care credits for
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employers and things of that nature so
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you can see that right now
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trump and biden have drastically
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different approaches so just to sum up
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the underlying reason for all of this
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president trump truly believes that the
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focus here should be on the count and
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the economy
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and the prosperity of business so most
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of his policies are focused on
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getting business to be as profitable as
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possible so those
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profits trickle down to employees to
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their vendors and their suppliers
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and therefore everyone will benefit when
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business does well
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and that makes sense considering his
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background he's a businessman and he
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believes that when business does well so
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does the entire nation
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now this is a stark contrast from
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candidate biden
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who is a stronger advocate of social
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welfare social justice
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reducing that income gap between the
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ultra high income
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and low income so you can see many of
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his platforms are focused on
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creating that tax at that higher level
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and then
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using those amounts to help pay for some
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other platforms to maybe
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assist with lower income middle income
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folks
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and that's why his platforms result in
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higher tax on
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high income and large companies
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so i hope you found that information
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useful we've got a few weeks now to the
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election so hopefully this can help in
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your decision
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if you have any questions about this
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information and the impact of
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either candidate on your business please
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leave a comment below
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and i'll respond and i look forward to
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speaking with you
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in my next video
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