March 28, 2022
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Blog
President Joe Biden released his budget proposal for fiscal year 2023 on March 28th that includes many of the same tax increases he proposed last year but were not enacted into law.
Shortly after the budget was revealed, the Treasury Department released its “Green Book,” which details the tax provisions in the president’s budget.
Many of the budget tax proposals were originally included in Democrats’ Build Back Better bill, but later struck from the legislation because Senator Kyrsten Sinema (D-Nev.) opposed them. That bill has yet to become law, but congressional Democratic leaders are expected to attempt passage of a scaled-down version of the legislation in April.
President Biden’s budget proposal also seeks to grant authority to the IRS to oversee of all paid tax preparers. It also increases the amount of the tax penalties that apply to paid tax return preparers for willful, reckless, or unreasonable understatements, as well as for forms of noncompliance that do not involve an understatement of tax,” according to the Green Book.
The President also said that no one earning less than $400,000 in annual taxable income will not incur a tax increase.
Here is quick list of the proposed tax changes as described in the Green Book (FYI: ‘date of enactment’ effective dates refers to future legislation, and not the budget. Budgets are not enacted into law):
Other provisions include:
The budget also increases the IRS budget $14.1 billion, an 18% increase over last year’s total. This amount includes $800 million for improving taxpayer service. Once again, this amount must be approved by Congress to be enacted into law.
The Odds that Any of This becomes Law:
Tax increases proposed by Biden are not expected to become law unless congressional Democrats create another budget reconciliation bill that can pass the Senate with only Democratic support. So far, they have had little success in using this process to pass legislation.
Democratic lawmakers spent most of last year trying to pass a budget reconciliation bill that failed to pass because Senator Joe Manchin (D-W.Va.) could not support it. The lack of that one vote meant the legislation could not pass the Senate.
Senate Democratic leaders will try to pass a slimmed-down version of the budget reconciliation bill (commonly known as the Build Back Better bill) next month. The legislation is expected to include fewer spending provisions, but it could include the tax increases that the House passed last year.
However, winning Manchin’s support for the legislation could force Senator Sinema to oppose it. She does not support tax rate increases and Manchin does. He has recently called for tax rate increases to be included in the legislation. If he succeeds in this endeavor, it is not clear how Sinema will respond. If she opposes the bill, it will not pass the Senate.
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