On October 28, 2021, President Joe Biden unveiled a framework for a $1.75 trillion tax and spending package.
The tax and spending provisions of the Build Back Better framework include:
- A 15% minimum tax on corporate profits for firms with earnings over $1 billion reported to shareholders, and a 1% surtax on stock buybacks.
- A 5% surtax on incomes above $10 million, as well as an additional 3% on incomes above $25 million.
- A Global Minimum Tax, consistent with OECD, The Organization for Economic Co-operation and Development, of 15%
- Close Medicare Self-Employment Tax Loophole by strengthening the Net Investment Income Tax for those making over $400,000
- Continue the limitation on excess business losses
- Universal, free preschool for three- and four-year olds, and an extension of an expanded child tax credit through 2022
- Extend the expanded Affordable Care Act premium tax credits through 2025
- Extend for one year the current expanded Earned Income Tax Credit for childless workers
- Increased IRS enforcement aimed at the wealthy
The framework as it currently stands does not mention a change in the maximum individual rate of 37% or the current maximum capital gain rate of 20%. (Capital gains are also subject to the net investment income tax of 3.8%.)
The framework is also silent on revising the Trump-era cap on state and local tax deductions, but northeast Democrats said they are confident a two-year suspension will be added.
It is uncertain as to whether The President will be able to get the support of the 50 Democratic senators and pass in the House of Representatives.
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