Joe Biden's Tax Plan

[s0me0nesmind1]

Looks like Joe Biden has released some early proposals of what he would change about the tax system.

• Imposes a 12.4 percent Old-Age, Survivors, and Disability Insurance (Social Security) payroll tax on income earned above $400,000, evenly split between employers and employees. This would create a “donut hole” in the current Social Security payroll tax, where wages between $137,700, the current wage cap, and $400,000 are not taxed.[1]
• Reverts the top individual income tax rate for taxable incomes above $400,000 from 37 percent under current law to the pre-Tax Cuts and Jobs Act level of 39.6 percent.
• Taxes long-term capital gains and qualified dividends at the ordinary income tax rate of 39.6 percent on income above $1 million and eliminates step-up in basis for capital gains taxation.[2]
• Caps the tax benefit of itemized deductions to 28 percent of value, which means that taxpayers in the brackets with tax rates higher than 28 percent will face limited itemized deductions.
• Restores the Pease limitation on itemized deductions for taxable incomes above $400,000.
• Phases out the qualified business income deduction (Section 199A) for filers with taxable income above $400,000.
• Expands the Earned Income Tax Credit (EITC) for childless workers aged 65+; provides renewable-energy-related tax credits to individuals.

Business tax changes:

• Increases the corporate income tax rate from 21 percent to 28 percent.[3]
• Creates a minimum tax on corporations with book profits of $100 million or higher. The minimum tax is structured as an alternative minimum tax—corporations will pay the greater of their regular corporate income tax or the 15 percent minimum tax while still allowing for net operating loss (NOL) and foreign tax credits.[4]
• Doubles the tax rate on Global Intangible Low Tax Income (GILTI) earned by foreign subsidiaries of US firms from 10.5 percent to 21 percent.
• Establishes a Manufacturing Communities Tax Credit to reduce the tax liability of businesses that experience workforce layoffs or a major government institution closure; expands the New Markets Tax Credit and makes it permanent; offers tax credits to small business for adopting workplace retirement savings plans; expands several renewable-energy-related tax credits and deductions and ends subsidies for fossil fuels.

Other Changes Include:
An $8,000 tax credit for childcare; equalizing the tax benefits of defined contribution retirement plans; eliminating real estate industry tax loopholes; expanding the Affordable Care Act’s premium tax credit; sanctions on tax havens and outsourcing, among other proposals[5] which are not included in our analysis due to the lack of detailed information.
Economic Effect
According to the Tax Foundation General Equilibrium Model, Biden’s tax plan would reduce the economy’s size by 1.51 percent in the long run. The plan would shrink the capital stock by 3.23 percent and reduce the overall wage rate by 0.98 percent, leading to 585,000 fewer full-time equivalent jobs.

Overall leaves a lot of the Trump tax reformation in place with just a few adjustments.

It effectively creates a "Donut" as far as social security where if you make $200k you stop social security payments @ around $140k, but then resume social security if you make over $400k. So I'm sure high earners are going to love having a 12.4% of their income disappear heh. Needless to say, something has to be done to fix our social security issues.

Additional tax credit for childcare is overall good - though I honestly think we should just expand schools to have daycare as well. The costs of daycare are just nuts in general - and if we want more 'Merican babies, you need to give people an incentive to reproduce.

President Biden’s Campaign Tax Plan

Biden’s tax plan is estimated to raise about $3.33 trillion over the next decade on a conventional basis, and $2.78 trillion after accounting for the reduction in the size of the U.S. economy. While taxpayers in the bottom four quintiles would see an increase in after-tax incomes in 2021...

taxfoundation.org

Though overall, this conversation might be worthless because if he keeps up with his public appearances were destined for another 4 years....

Also even if he does get elected might not have the senate/house majority to pass it.

 

[fleshconsumed]

Overall leaves a lot of the Trump tax reformation in place with just a few adjustments.

Just a few adjustments? Are you serious?

It taxes capital gains at standard income rates after certain threshold, that's going directly after the wealthy, it also creates AMT for corporations so that the likes of GE can't evade taxes for years on end through creative accounting.

If true, I think that's a pretty radical and pretty progressive tax overhaul. I'm actually surprised as I didn't think Biden would go that far. The only thing I'd like to see is raising the inheritance tax - dead don't need the money.

Just a few adjustments lol... We'll let the FOX NEWS be the judge of it, I bet they'll have a meltdown.

 

[woolfe9998]

I wouldn't call it radical, but it isn't insignificant either. The changes in capital gains tax are the most substantial changes in the package. Not only is it taxing capital gains at the income rate, but eliminating the step up in basis means getting rid of this weird rule where little to no capital gains taxes are ever paid on real property which is sold out of an estate.

The "donut hole" is not really a problem as I see it. Everyone contributes up to a certain income. To cover the shortfall, however, they tap only the very high wage earners. If it didn't have that donut hole, people making 150K a year would justifiably squawk at the tax increase as that is barely above middle class these days.

Overall it looks like a decent set of proposals, but I would have gone farther because I think we need to raise more revenue.

 

[dank69]

...

Overall it looks like a decent set of proposals, but I would have gone farther because I think we need to raise more revenue.

Which is pretty much what reasonable people expected from a moderate like Biden. The Bros will cry that it isn't enough and the conservatives and "independents" will cry about all the socialism.

 

[Vic]

Somebody's gotta pay for all the debt that Trump and the Republicans have racked up.. again.

 

[senseamp]

Joe should make State and Local taxes a tax credit on federal returns until states rebuild their finances post COVID. Also, make health insurance premiums a refundable tax credit.
I don't think Democrats should continue with this BS that they have to be the one that raises taxes, while GOP runs up the deficit to give their favored groups money.
Democrats should run even bigger deficits to pay for programs they support, and force the right to be the fiscally responsible ones. Otherwise we get into this situation where there is always money to pay for stuff Republicans want, but when Democrats want to pay for stuff they want, all of the sudden we need to worry about the deficits.

 

[mect]

I don't like the donut hole idea. It just emphasizes how regressive social security taxes are. Instead of the donut hole, they should put the hole at the bottom. You don't pay social security on your first $30k or so of income, but you still qualify for the same level of benefits.

 

[ondma]

Overall sounds reasonable. The social security still does not make sense. They should just extend the tax to all income brackets. Eliminating the tax from 137k to 400k makes no sense, although it is a step in the right direction to tax those over 400k.

 

[Moonbeam]

I would like to see a 1 million dollar maximum on any salary and perks for a 5 year period with anything in excess going to the government. I think this would result in a massive deescalation of Corporate salaries at the top freeing up lots of funds for regular workers and lower priced goods including more paid out in taxes all around. I think also the myth that CEO salaries are commensurate with real worth would be quickly blown out of the water.

 

[woolfe9998]

Which is pretty much what reasonable people expected from a moderate like Biden. The Bros will cry that it isn't enough and the conservatives and "independents" will cry about all the socialism.

Not a bro myself but I still think it's not enough. Trump is leaving us (hopefully) with an enormous deficit. That is in addition to the fact that we frankly need to increase spending in certain areas.

I foresee a huge problem though, because Trump is also leaving us with a bad economy just as every republican since Reagan has done, and I think it's going to make it very difficult for Biden to sell the idea of tax increases in that climate.

 

[SmCaudata]

I'd like to see more of an overhaul to corporate taxes. We should be reducing the payroll taxes in ways that incentives increasing wages and salaries up to $100k or so. Then put on luxury tax penalties on total compensation graeter than $1mil. Maybe for every $1 of compensation over $1 mil you pay $2 into government coffers. You could also cap wage dedections at $400k to line up with the social security changes. This would quickly squash the salary race of CEOs.

Lastly, I'd like to see lower taxes for companies than do >80٪ of manufacturing in the states.



Sent from my SM-G975U using Tapatalk

 

[s0me0nesmind1]

Which is pretty much what reasonable people expected from a moderate like Biden. The Bros will cry that it isn't enough and the conservatives and "independents" will cry about all the socialism.

Except this is the proposal. Everyone knows thats the most radical.

After every senator, congressmen, and Biden's aide put their lobbying hands in the cookie jar it will be ridiculously watered down.

 

[s0me0nesmind1]

Not a bro myself but I still think it's not enough. Trump is leaving us (hopefully) with an enormous deficit. That is in addition to the fact that we frankly need to increase spending in certain areas.

I foresee a huge problem though, because Trump is also leaving us with a bad economy just as every republican since Reagan has done, and I think it's going to make it very difficult for Biden to sell the idea of tax increases in that climate.

Please just find me one president that has the balls to reduce our military budget. You would be a lot more justified in adding your "increase spending" if you trimmed some of the obvious fat first.

 

[woolfe9998]

Please just find me one president that has the balls to reduce our military budget. You would be a lot more justified in adding your "increase spending" if you trimmed some of the obvious fat first.

Reducing military spending would definitely be part of my package, but no POTUS could ever sell a defense cut large enough to make up for the massive deficit and the areas where IMO we are under spending. In fact, you could put the military budget at ZERO and it still wouldn't even eliminate just the deficit part.

 

[Brainonska511]

Please just find me one president that has the balls to reduce our military budget. You would be a lot more justified in adding your "increase spending" if you trimmed some of the obvious fat first.

You won't find a politician who would do it because we don't even want to have a serious national conversation about what our defense priorities should be.

 

[dank69]

Please just find me one president that has the balls to reduce our military budget. You would be a lot more justified in adding your "increase spending" if you trimmed some of the obvious fat first.

I seem to remember conservatives screaming how we were all going to regret Bill Clinton reducing the military budget.

 

[thilanliyan]

Somebody's gotta pay for all the debt that Trump and the Republicans have racked up.. again.

Lol, so true, GOP next election cycle will be like "see the Dems raise taxes!!! We'll lower them...promise!!"

 

[Bitek]

Overall looks pretty good to me. Not perfect, but better than expected.

What about SALT limits? That fucker needs to go.

Tired of my tax dollars subsidizing backwards red states like KY who never developed their economy, and that's just another punch in the face.

 

[fleshconsumed]

Not a bro myself but I still think it's not enough. Trump is leaving us (hopefully) with an enormous deficit. That is in addition to the fact that we frankly need to increase spending in certain areas.

I foresee a huge problem though, because Trump is also leaving us with a bad economy just as every republican since Reagan has done, and I think it's going to make it very difficult for Biden to sell the idea of tax increases in that climate.

Granted, this is not how FOX is going to spin it, but as I read it, I don't see this tax plan raising taxes on anyone making less than $400K. And logically speaking, if we have to increase taxes to make up for the GOP deficit hole of 2017, it's going to have to come from the top earners and the wealthy, the people who are most equipped to carry extra tax burden. And let's not kid ourselves, those people also reaped the most benefits in the past 20 years, so I don't see a problem with them paying more.

 

[thraashman]

The only thing I'd like to see is raising the inheritance tax - dead don't need the money.

This is a big one that needs to be changed. Something like no inheritance tax for the first $1.5 million. From $1.5 to $10 million, 25%. Tack on 5 percent for every $5 million above that up to a full 100% tax. No inherited billions or even hundred millions. Eliminate the step-up loophole completely.

 

[alcoholbob]

Some ETFs like QLD already have their capital gains tax basis set as return of capital instead of capital gains, I expect the rich will pile into those if this tax law passes...

Also this will make REITs seem more tax friendly in comparison since about 20% of REIT dividends are categorized as return of capital.

 

[fleshconsumed]

This is a big one that needs to be changed. Something like no inheritance tax for the first $1.5 million. From $1.5 to $10 million, 25%. Tack on 5 percent for every $5 million above that up to a full 100% tax. No inherited billions or even hundred millions. Eliminate the step-up loophole completely.

To be honest, I would even be in favor of more aggressive policy than that. I'm not sure of the exact threshold, but I would say it should be 100% death tax on anything more than $1-5 millions per individual. I think that would go a long way towards fixing many of our societal ills.

 

[fskimospy]

To be honest, I would even be in favor of more aggressive policy than that. I'm not sure of the exact threshold, but I would say it should be 100% death tax on anything more than $1-5 millions per individual. I think that would go a long way towards fixing many of our societal ills.

I agree, generational wealth is a huge source of the problems our society faces. People who never did a single thing to earn their wealth or power are given enormous influence over how our society functions.

100% tax on any wealth transfers over say, $1 million. It would not only encourage rich people to use their money instead of hoarding it, it would help to ensure that any person who is rich enough to influence society actually earned their way there.

 

[s0me0nesmind1]

I agree, generational wealth is a huge source of the problems our society faces. People who never did a single thing to earn their wealth or power are given enormous influence over how our society functions.

100% tax on any wealth transfers over say, $1 million. It would not only encourage rich people to use their money instead of hoarding it, it would help to ensure that any person who is rich enough to influence society actually earned their way there.

Now explain how you enforce this with global banks. You think people would throw away millions ?

The US is nice to live in, but it's definetly not the only nice place.

 

[fskimospy]

Now explain how you enforce this with global banks. You think people would throw away millions ?

The US is nice to live in, but it's definetly not the only nice place.

The US already enforces substantial regulations beyond its borders by limiting access to our financial system for those who don't play ball. That's what US sanctions are all about. So sure, people could escape with their billions to a country that doesn't abide by those laws but most of those are places most people don't want to live.

There will always be some evasion of these taxes, that much is a given. It would be a very large net positive for society though if we can make it that people of enormous power and influence actually had to work to get it.