As discussed in our Nov. 20 blog, the Biden Administration is considering increasing taxes. Whether that will be accomplished is, of course, speculative. But given that the Democrats have a majority in the House and Senate, we are experiencing a historically high federal deficit and President Joe Biden is proposing a sweeping two-part “infrastructure, climate and jobs” plan estimated at $3 trillion, a tax increase is perhaps a bit more likely now.
To pay for this infrastructure package, the following are likely to be the proposed federal tax changes:
- Raise the corporate tax rate from 21 to 28%,
- End subsidies for fossil fuel companies,
- Require multinational corporations to pay the U.S. tax rate rather than the lower rate paid by their foreign subsidiaries,
- Increase the top individual income tax rate from 37 to 39.6%,
- For taxpayers reporting more than $1 million in taxable income, their capital gains would be subject to the 39.6% rate, and
- An increase in taxes for appreciated assets passed through an estate.
While obviously controversial, the plan does not necessarily need Republican support to become law.