Tax the Rich, Part 2
Not so much
The Biden Administration today released an outline of its latest tax plan, a previous version of which I referenced in a post titled “Tax the Rich?”. It looks like the Biden administration has now given up on major parts of its previous plan aggressively to raise taxes on the “rich”, in the face of intransigent opposition from a few members of its own party (DINOs?) and of course continued unified opposition from the Republicans.
Gone are plans to tax unrealized capital gains (for billionaires and estates), to increase the statutory tax rate on corporations and pass-through business entities, to lower the estate tax exemption amount and to enhance the ability of the IRS to detect tax evasion by requiring banks to report additional account holder information.
Still on the table are proposals to impose a minimum 15% tax on corporations’ domestic and international earnings, a new 1% tax on stock buybacks, surtaxes on individuals reporting incomes above $10mm and $25mm (the top 0.02% of earners), and increased staffing for the IRS. Under the latest proposal, the top marginal (not effective) tax rate would hit 45% for individuals’ earned income and 31.8% for capital gains, the highest rates since the Reagan administration.
At the other end of the income and wealth distribution, the outline includes extensions of the earned income tax credit and the child care tax credit, as well as tax incentives for electric vehicles and renewable energy. Not mentioned in the latest outline is any possible rollback of the $10,000 cap on state and local tax (SALT) deductions for individuals, a feature of the Tax Cut and Jobs Act passed under President Trump.
None of this is yet written into legislation and it has not been scored by the CBO. There is still some way to go before we have a new tax bill, which may look different from the latest or previous Democratic proposals. And keep in mind that we have been discussing in these posts only the tax (revenue raising) side of Biden’s budget, not the spending side, which is at least as important and perhaps far more interesting.
So stay tuned. There will lots more to talk about.
Links:
Biden Turns to Taxes on Corporations and Millionaires to Pay for Agenda, WSJ 10.28.2021
Live Update, Biden Budget Plans, NY Times, 10.28.20211
Biden Unveils Revised Spending Plan, Washington Post, 10.28.21