Most of the revenue used to finance the Built Bigger Blowout comes from taxing years if not decades of unrealized appreciation (paper profits) of the Evil Rich. After that first hit, as you say, their effective basis would be whatever their assets were worth at the end of (say) this year, so only future incremental gains in the market, net of losses relative to the taxed EOY mark, would result in additional taxes due. So mostly it’s about stealing some 10-15% of their net worth from the billionaires right now (who often hold highly appreciated stock in companies they created ala Amazon or Tesla). Then, as an afterthought, they have this ongoing MTM tax regime for the Rich instead of letting them defer unrealized gains like everyone else.
It’s also very disingenuous of Biden to say he’s going to make Billionaires pay at least 20% on their income, when what he’s taxing is definitely not “income” under the law. They’re not “getting away with” anything more than anyone else right now - paper profits aren’t income until or unless this law passes.
doubles capital gains taxes for those over $1M (40% vs 20%)
raises corporate income tax to 28% (from 21%)
raises top personal income bracket back to ~40% from 37%
kills step up on death, adds restrictions on estate tax planning
kills lots of existing fossil fuel related tax incentives (depreciation etc)
and on the other side
more money for the IRS to target his opponents, but less than proposed before
more money for low income housing
tax credits for onshoring jobs back to the US
It’s a weird mix of old unpopular tax proposals and this new “soak the rich, once” thing. I’m not sure it will survive in the current form, but maybe they get something vaguely like it through before they lose control of Congress in the midterms.
Correct, they don’t do anything illegal. But they are getting away with paying a fair share of their de facto income, even if that de facto income is in the form of loans secured by their assets and does not fit the definition of income most of us experience.
The other thing they are getting away with is the step up basis on death for unrealized gains. That’s one part of the proposal that I could live with. The unrealized gains passed to heirs without any taxation by the step up in basis isn’t right. And that sounds a lot easier to put in place than taxing unrealized appreciation each year. Just consider death a realization event but add a cap on capital gains that can be excluded from that realization (so it does not hit small estates).
Doubling of capital gains in the proposal is weird. Basically above $1M, might as well just add them to regular income since that’s going to be at top rate of 40% either way. Why make a special distinction at this stage?
I’m not crazy about the increase in corporate income tax though. 21% is somewhat lower than the average of the pack but 28% would place us in one of the more unfavorable tax rate compared to other industrialized countries and that could be greatly detrimental. Especially at a time when countries may look to scale back some of the globalization trends and relocate production capabilities home to reduce exposure to geopolitical risk.
so you can’t take your capital losses against your income!
I’m not crazy about the increase in corporate income tax though. 21% is somewhat lower than the average of the pack but 28% would place us in one of the more unfavorable tax rate compared to other industrialized countries and that could be greatly detrimental
agreed. we were pretty uncompetitive before when Obama had his thugs regulators shutting down foreign re-domestication mergers abroad, and then we were really good comparatively under Trump. This would be a big step back in US competitiveness for sure.
But that would not be an issue for capital gains over $1M. You already deduct capital losses against other capital gains. The balance if over $1M in gains would be added to income but it would not apply to capital losses. That’d make it easier to sync capital gains top rate with income top tax bracket.
but the proposed law isnt capital gains over $1M get taxed worse, it’s any capital gains if you have over $1M in income get taxed worse. From the accounting link previously -
proposes to tax long-term capital income and qualified dividends at ordinary-income rates for taxpayers with taxable income of more than $1 million, rather than the current rates topping out at 20%.
so they don’t want to just dump all your long term capital transactions into ordinary income or you might be able to pay less taxes on your regular (non capital) income if you realized losses. As it is, you can only take $3k against your normal income for net capital losses of any type.
Thanks for the clarification. So basically the proposal would be to create a 4th bracket for capital gains beyond the 0%/15%/20% currently. That’s a big step up though.
On the bright side, it looks like that billionaire thing is unconstitutional and faces both political and legal opposition, and without it they won’t have money for all the nonsense.
Yeah that one was only wishful thinking. But that wouldn’t mean the other elements in the proposal are off the table though, including raising capital gain top bracket and nixing step up basis on death.
NY specific post - there’s a ton of budget and tax changes here that may be of interest to locals. Covid and small business and similar benefits, as well as a gas tax holiday, lower middle class state rates, etc.
I’m lovin’ that gas tax holiday commencing first of June!
Don’t drive much so I think I have enough gasoline in the tank to last until June first. After that it’s gonna be “fill 'er up”. The ethanol-free stuff I use costs a little more (worth every penny). Now it’ll be costing me less than before all the way until year’s end.
Your situation would actually make me hate a gas tax holiday… Trading your $5-10 a month savings for the road fund losing billions? That loss of funds will inevitably lead to significantly higher gas tax in the future or worse roads.
The IRS tossed an estimated 30 million so-called paper-filed information returns in March 2021, according to an audit by the Treasury Inspector General for Tax Administration.
The news has sparked anger in the tax community, many of whom worry about the agency’s ability to verify returns, triggering more error notices especially with limited ways to reach the IRS.
Biden’s handlers tweeted that to reduce inflation we need to increase the corporate tax rate. Peter Doocy asks the new press secretary how raising taxes on corporations reduces the price of gasoline, cars, and food. She does not answer the question at all but veers off into the Democrats “fairness” gibberish. Edit. Click on Mark Hemingway to get a video to play
A year after the IRS leaked the data to Democratic operatives for publication, we still have no answers. It’s not even clear they’re loooking.
The person or persons who stole the private files appear to have comprehensive and unfettered access to every household’s private tax information.
But finding the thief is not a top priority for the Biden administration. It is unclear if the administration has even bothered to ask for a copy of the stolen files.
It’s not just tax returns. It’s also things like records of stock trades, information that is sent to the IRS about financial activities.” To pretend the original source of these files is not the IRS is to pretend the thief was able to steal comprehensive tax information of thousands of the highest-earning Americans, year after year for 15 years, from dozens or hundreds of different tax accountants.
