Tax Reforms Expected Following Biden Election Victory
According to announcements made during the election campaign, Biden’s tax proposals include a potential increase in the federal headline rate of corporate tax from 21 to 28 percent, reforming the GILTI rules, and introducing a 15 percent minimum tax, or “book tax,” on companies with reported income in excess of USD100m. He also discussed imposing sanctions on jurisdictions deemed to facilitate corporate tax avoidance and voiced support in July 2020 for tax relief for manufacturing companies.
In terms of personal taxes, Biden has said he would restore the top rate of personal income tax to 39.6 percent from 37 percent; restrict tax breaks for wealthy taxpayers; and tax capital gains as ordinary income and prevent wealthy taxpayers from deferring tax through investments. He also proposed that estate taxes, also reduced by the TCJA, should be raised back to “the historical norm.” Finally, he has said that payroll taxes should be expanded for those on high incomes to fund more generous social security benefits.
The Democratic plan pledges “marked tax relief” for working families, including through more generous, refundable tax credits to benefit for those on low and middle incomes, equal tax treatment for retirement contributions, and more accessible tax breaks for homeownership.
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