BIDEN’S PLAN TO END TAX PROVISION
President Joe Biden had moved significantly forward on key elements of his Build Back Better program, all of which are funded by notable changes in tax law. Biden plans to end tax provision that has saved wealthy people billions every year for the past 90 years.
“Middle-income people spend most of their assets before they die, whereas high-income people have more wealth than they can spend,” said Leonard Burman, a co-founder of the Urban-Brookings Tax Policy Center, who contributed data to the Senate’s predictions. “So the more unequal wealth becomes, the more assets you’ll find are being passed tax-free.”
The program would provide many benefits for low- and middle-income Americans. The perks include guaranteed family and medical leave, free preschool and community college, limits on child-care costs, extended tax breaks, and more. All of this sounds good, but in order to make that happen, Biden has a long list of tax increases for the wealthiest Americans to provide funding.
Some of Biden’s initiatives include:
- Increasing taxes on those who make more than $400,000 a year
- Restore the top tax rate to the level it was in 2017
- Tax capital gains as income
- Eliminate loopholes in inherited-wealth taxes
- Expand credits for families caring for children and elderly relatives, first-time homebuyers, and people who purchase electric vehicles.
- Expand the Child Tax Credit for 2021 up to $3,000 per child aged 6 to 17 and up to $3,600 for children under 6
- Raise the Child and Dependent Care Tax Credit from a maximum of $3,000 to up to $16,000 per family with multiple dependents
- Equalize the tax benefits of retirement plans for everyone by providing a refundable tax credit instead of a deduction.
It’s up in the air whether proposed tax increases will make it into the tax code. Republicans in Congress will definitely fight back on the tax increases. Honestly, it’s likely some Democrats won’t be too happy about them either. It won’t be a surprise if revenue raisers are dropped and new tax boosts are added during the congressional process.
