May 28, 2021
President Joe Biden’s Administration on Friday released a $6 trillion budget request for next year that includes the tax proposals from the recently released American Jobs Plan and American Families Plan. These are the only revenue proposals in the budget, and they are expected to raise $3.6 trillion over the next ten years.
Shortly after the budget was revealed, the Treasury Department released its “Green Book,” which details the tax provisions in the president’s budget. They include revenue increases on corporations, wealthy families and fossil fuels, as well as proposals to close the Tax Gap.
Here are some of the tax changes proposed in Biden’s first budget:
Ensure that all trade or business income of taxpayers with adjusted gross income in excess of $400,000 is subject to the 3.8% Medicare tax. The effective date would be for taxable years beginning after December 31, 2021.
In addition, the budget includes a proposal to regulate professional tax preparers. It provides the Treasury Secretary with “explicit authority to regulate all paid preparers of Federal tax returns, including by establishing mandatory minimum competency standards,” according to the Green Book.
Biden's request also includes the family-oriented tax credits that are in the American Families Plan: They are:
The effective dates for all proposals other than the premium tax credits is taxable years beginning after December 31, 2021. The effective date for the permanent extension of the premium tax credits is after December 31, 2022.
While some of these proposals can be concerning, it is important to note that the president’s budget is not a bill. Congress is also not bound to include any of these provisions in legislation. Budgets are a statement about a president’s legislative priorities. They are aspirational documents, and the one that was released today is just that.
Still, lawmakers who are in the president’s political party will likely use today’s budget as a guide for what to include in their own budgets. These provisions can also be included in tax or spending bills.
A fact sheet on Biden’s budget can be found here.
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