White House releases its $6 trillion budget today. The Washington Post reports President Biden will propose no new major policies in the budget beyond the many ambitious ideas in his American Jobs Plan and American Rescue Plan. The budget reflects his $2.3 trillion infrastructure proposal, $1.8 trillion education and families plan, and $1.5 trillion in proposed discretionary spending. It projects deficits exceeding $1 trillion through 2030.
The President’s budget has a capital gains tax rate increase—for gains realized in 2021. The Wall Street Journal reports (paywall) that Biden’s proposed increase in the top capital gains tax rate to 43.4 percent will come with a retroactive effective date of April 28. It is intended to prevent investors from unloading stock now to avoid a steep hike in investment taxes.
Then there’s the proposed tax on unrealized capital gains at death. TPC’s Rob McClelland and Howard Gleckman explain why it will be so difficult for Biden to tax unrealized capital gains at death and keep his promise never to raise taxes on those making $400,000. TPC estimates that 98 percent of decedents who earned $400,000 or less could be exempt from the new tax—but that leaves 2 percent who could face the tax increase.
Senate Republicans counter Biden’s infrastructure plan.. The GOP plan includes $506 billion for roads, bridges and other major projects and $98 billion for public transit, but only $257 billion is new money. That’s far short of Biden’s latest offer of $1.7 in new funding. The latest GOP plan would fund most of its spending with unspent money from past COVID-19 relief bills and lacks specifics about how to pay for the rest. Biden wants to raise corporate taxes. Despite the differences, the White House says it is willing to keep talking beyond Biden’s Memorial Day deadline.
Senate Finance Committee advances a hike in electric vehicle tax credits. The panel approved on a tie vote the Clean Energy for America bill. The bill would increase to as much as $12,500 the tax credit for electric vehicles (EVs) assembled by US-based unionized workers that cost $80,000 or less. There would be no limit in the total number of credits for any automaker. The current EV tax credit maxes out at $7,500 and phases out for individual automakers once they have sold 200,000 EVs.
On June 9 with TPC: What are the effects of the Biden administration’s corporate tax proposals? TPC and the University of North Carolina Tax Center will host a virtual event featuring accountants, lawyers, and economists who’ll examine how a tax on corporate book income might work and consider whether there are better ways to limit corporate tax preferences. Speakers will discuss how Biden’s corporate tax plans might affect investment in the US, economic growth, and competitiveness of US-based corporations and whether an international agreement on a minimum tax could effectively limit harmful tax competition. Learn more and register here.
Congress will not be in session next week. In honor of Memorial Day, the Daily Deduction will post Tuesday, June 1. It will resume its regular schedule once Congress returns.
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