Will a new tax reform be launched soon?

The change of the President from Republicans to Democrats will probably lead to a tax reform soon. It could be an historic turning point in American history.

What will this tax reform include?

According to the tax plan released by Biden before the election, there will probably be actions to raise taxes on individuals with income above $400,000.

In general Biden’s objective is to increase taxes on high earners. He also plans to reintroduce, in some cases, policies that had been in effect prior to the Trump administration.

Corporations will be affected too. The plan includes raising the corporate income tax rate and imposing a corporate minimum book tax.

 What are the main points of Biden’s fiscal plan?

1.  One major point is raising taxes on individuals who make more than $400,000.  For those making under such amount tax rates will remain at current levels.

2. Another point is about raising the top income tax rate for individuals.  It should be restored from 37% to 39.6% and should apply to individuals making more than about $518,400 as well as joint married couples making more than about $622,000.

3. The tax benefits of itemized deductions should be capped to 28% of value. This would mean: limited itemized deductions for taxpayers with tax rates higher than 28 percent.

4. Long-term capital gains and qualified dividends would be taxed at the ordinary income tax rate of 39.6% on income above $1 million.   

5. The top corporate income tax rate would increase from 21% to 28%.

6. A 15% minimum tax would be imposed on book income of large companies (starting at $100 million annual net income).

7. Social Security payroll tax would be applied to those earning over $400,000 a year.

8. Profits earned from U.S. firms’ foreign subsidiaries would be taxed at 21%.

We’ll see what the developments of these plans are.

In the meantime our studies are at your disposal for your fiscal needs. Get in touch.

More detailed information about Biden’s fiscal plans can be found here https://taxfoundation.org/joe-biden-tax-plan-2020/#_ftn2