06/07/2021

Eight Tax Proposals Keeping Us Up at Night

Key points from Biden's "Green Book"

On May 28, the Treasury Department released its explanation of the tax proposals included in President Joe Biden's fiscal year 2022 budget submission, often referred to as the "Green Book." The sweeping proposals include raising taxes on higher-income individuals and corporations, capital gains tax rate increases, new estate and gift tax provisions and other changes that could have far-reaching and substantial consequences for our corporate and high-net-worth clients. In the coming weeks, Venable will unpack and explore several of these proposed reforms in more depth. This alert highlights the key proposals to which taxpayers should be paying close attention.

1. Raising Corporate Tax Rates

The Green Book proposes to raise the corporate income tax rate from 21 to 28 percent for tax years after Dec. 31, 2021. President Biden has stated publicly that he wants to raise the corporate tax rate from 25 to 28 percent. In addition to the proposed increase in the corporate tax rate, a new 15 percent minimum tax on worldwide book income for corporations is proposed. The minimum tax would apply to corporations with more than $2 billion of book income on financial statements.

2. Increase Individual Tax Rates

The Green Book proposes to increase the top individual income tax rate to 39.6 percent for tax years after Dec. 31, 2021 (43.4 percent after taking into account the 3.8 percent net investment income tax). For joint filers, the top rate would apply to taxable income above $509,300, as adjusted for inflation. The proposal would also repeal the deferral of gain from "like-kind" exchanges of real property to the extent such gains exceed $500,000 for each taxpayer ($1 million for joint filers). The proposal would also make permanent the limitations on deducting losses from noncorporate businesses, which are scheduled to expire for tax years after Dec. 31, 2026.

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