During his presidential campaign, President Biden spent a significant time emphasizing his plans to tackle infrastructure and climate change. Now that the $1.9 trillion coronavirus relief package has passed, Biden is turning his attention to the next major legislative plans. This new initiative would address the nation’s infrastructure and climate change, amongst other things, and is estimated to require between $2 to $4 trillion in funding.
Who would be affected by the tax increases?
There have been a number of proposals as to how to reach that funding, with most of them affecting wealthier individuals and corporations. While most working-class and middle-class Americans would be safe from these increases, any individual making over $400,000 would be subject to an increase in the income tax rate. In addition, the proposal suggests implementing a higher capital-gains tax rate for those individuals who are making over $1 million every year. Estate taxes are also being looked at as a place to raise funds.
Corporations would see significant changes in tax rates, as well as, in their ability to navigate their business offshore. It has been proposed to increase the current tax rate on corporations from 21% to 28%. LLCs and Partnerships would see a cut to their tax preferences under this new proposal. Laws that allow for corporations to move jobs and operations off-shore would be revisited.
This proposal also seeks to use the collaboration of other nations to help secure funding. According to an article on Seeking Alpha by Yoel Minkoff, “Treasury Secretary Janet Yellen is reportedly working with countries worldwide to forge an agreement on a “global minimum tax” for multinationals.”
If these proposals pass, it would be the first hike in federal taxes since 1993.