Biden promises tax increase on wealthy

This week President Joe Biden said a tax increase for wealthy individuals was on his legislative agenda.

“Anybody making more than $400,000 will see a small to a significant tax increase,” President Biden said during an interview with ABC’s “Good Morning America” on March 17.

Those tax increases may include a number of changes to pay for the President’s Build Back Better plan, which is expected to be rolled out this spring. The proposal could exceed $2 trillion and include funding for infrastructure, green investment and addressing racial justice.

The specifics of the tax proposals have not been released, but will likely mirror promises made during his campaign, including:

• Repealing like-kind exchanges
• Ending capital gains treatment of carried interest – or “the promote” as it is often referred to in the real estate industry.
• Creating a higher capital-gains tax rate for individuals earning at least $1 million annually
• Raising the corporate tax rate to 28% from 21%
• Paring back 20% deduction for pass-through businesses
• Increasing the income tax rate on individuals earning more than $400,000
• Ending step-up basis for estate taxes.

Passing any taxes increases will not be easy. Democrats will likely need to resort again to the reconciliation process, which would allow passage in the Senate without Republican votes. 

Using the reconciliation requires Congress to first pass a budget resolution for the government’s fiscal year 2022, which starts October 1, 2021. Democrats hold slim majorities in both chambers of Congress, giving moderate Senators like Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) outsized influence in the process. Many moderate Democrats are also concerned about the impact of tax increases on the economy as it recovers from COVID-19.

ICSC is already lobbying Congress against repealing like-kind exchanges and carried interest.

For more information about these issues, contact Phillips Hinch, ICSC Vice President of Tax Policy, at 202-626-1402 or phinch@icsc.com.