Biden releases $6 trillion budget

On Friday, May 28, 2021, the White House released its $6 trillion proposed budget for FY 2022, which begins October 1, 2021. The document provides new details on the Administration’s spending and tax priorities. It includes the president’s earlier proposals to make long-term investments in the nation’s infrastructure and human capital, such as funding for preschool and two years of free community college.

The budget is largely an aspirational document. While it lays out President Biden’s vision, it is still up to the Congress to enact legislation to fulfill its goals.

The plan promises to “eliminate long-standing loopholes, including lower taxes on capital gains and dividends for the wealthy, which reward wealth over work.” It assumes that the capital gains tax increase would take effect in late April 2021, meaning that stock sales made earlier this year could be subject to his proposed top capital gains rate of 39.6% (currently 20%). Many Democratic and Republican lawmakers  have already expressed skepticism about the scale of that increase.

As reported earlier, the president has suggested several tax increases that could impact the retail real estate sector:

• Limiting like-kind exchanges to $500,000 of deferred gains annually
• Increasing the top rate on ordinary income to 37% to 39.6%
• Ending capital gain treatment for carried interest or the promote
• Ending stepped-up basis for inherited assets

The President’s budget can be found here. Further details of the tax proposals or provided in the U.S. Treasury Department’s Greenbook here.

For more information, contact Philips Hinch at phinch@icsc.com.