Summary
President Biden’s $3.5 trillion 2022 budget – the Build Back Better Act – is a pretty lofty financial plan that seeks to aid American families, workers, and businesses by evening our country’s economic playing field.
Build Back Better will increase federal revenue by $2.1 trillion over 10 years and includes over $1 trillion in expanded tax credits for both individuals and businesses.
The three main goals for the agenda are as follows:
- Lower Costs for low-to-mid income American families
- Cut Taxes by providing tax breaks for families
- Create Jobs through new sustainability efforts and increased investment in worker training
House Speaker Nancy Pelosi (D-CA) says that lawmakers are working to pass the bill by September 27, though it looks to remain a partisan package, with no Republican backing.
Top Implications for High Earners
- Top Marginal Income Tax Rate
Part of the new spending budget will be funded by an increased top marginal income tax rate for America’s high-earners. The proposed rate is set at a steep 39.6% for individual earners with an adjusted gross income (AGI) over $400K.
Total increases on individual taxes are expected to raise $950 billion in revenue.
- Capital Gains Tax Rate
Capital gains tax rates are also poised to take a hard hit. The President has proposed increasing the top marginal capital gains tax rate by 5% to 25% for individual earners with an AGI over $400K.
Top Implications for Businesses
- Corporate Taxes
The budget proposed a return to progressive tax rates for major corporations with those will annual income over $5 million getting hit with a 26.5% tax rate.
- Multinational Taxes
The budget also suggests assessing Global Intangible Low-Taxes Income (GILTI) on a country-by-country basis as well as lowering the GILTI deduction to 37.5%. These plus several other limitations on multinational corporations will be purposed to prevent profit offshoring and other tax avoidance schemes used by big businesses.
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