6. SALT Cap (34)
Ever since Trump’s 2017 tax overhaul limited federal write-offs for state and local taxes, or SALT, to $10,000, Democrats have been seeking to reverse the change. It has proven to be a controversial—and expensive—task because the benefits largely flow to the top earners. Survey respondents said it’s possible that Democrats can push through a change, but it may be just a higher cap, rather than a complete repeal. Yellen said Tuesday she’d work with lawmakers to address “disparate treatment” stemming from the limit.
7. Minimum Tax on Foreign Income (31)
Biden’s campaign plan had an increase in the tax rate on profits U.S. companies earn abroad to 21% from 13%, undoing a change Trump made in 2017 and raising $442 billion in the process, according to Urban-Brookings estimates. Republicans and business advocates say boosting tax rates on domestic and offshore income alike could cause American companies to leave for other countries where the tax laws are more favorable. The idea of a global minimum tax is also currently the subject of negotiations between the U.S. and nearly 140 other countries at the Organization for Economic Cooperation and Development, so the U.S. could also adopt some international tax law changes to comply with a resolution that is expected to be reached later this year.
8. Capital Gains Tax (30)
Biden made higher taxes on capital gains for those earning $1 million or more income a centerpiece of his tax plan. “The richest Americans can totally escape tax on large amounts of their income coming off wealth,” Kamin in the interview. Biden has talked about a plan that would increase the rate on capital gains earnings to 39.6% from 23.8%, which could generate an estimated $373 billion in higher revenue. But the idea is politically tricky because Congress has given special breaks on investment income since 1921.
9. Itemized Deductions (24)
Biden’s campaign plan limited itemized tax breaks to 28%, or 28 cents for every dollar of income, for those making more than $400,000. He also called to restore another deduction limitation that has been temporarily paused since the 2017 tax law, which prevents taxpayers from using legal tax maneuvers to completely avoid taxes. Critics say it would hurt small business owners who largely pay taxes on their businesses via their personal tax filings.
10. Minimum Tax on Profits (22)
Biden has sought to address situations where major tech companies, like Amazon.com Inc, Netflix Inc. and Zoom Video Communications Inc., have largely been able to avoid paying federal income taxes in some years despite turning a profit because they used legal maneuvers, including write-offs for business expenses, to whittle down their tax bill. Biden campaigned on imposing a minimum 15% tax on corporations’ book income. The change would upend decades of differences to how companies compute their finances for tax purposes and faces significant hurdles to becoming law.
11. Payroll Tax on High Earners (20)
Biden campaigned on instituting higher payroll taxes on incomes above $400,000 as a means to increase Social Security funding. Currently, payroll levies are only applied to income up to $142,800. However, the idea is unlikely to comply with the rules for a budget-reconciliation bill—the vehicle Democrats would need to use to defeat a Republican filibuster—making its likelihood remote.
12. Wealth Tax Lite (17)
While Biden has eschewed progressive Senator Elizabeth Warren’s wealth-tax plan, there’s broader support for some effort to target asset holdings. Wyden, an Oregon Democrat and head of the powerful Senate Finance panel, has urged the White House to consider his plan to require wealthy individuals to pay taxes on unrealized gains of stocks, bonds and other assets annually, instead of when they are sold. The idea has been criticized for being very difficult for the IRS to administer and enforce.
Forecasts Pending
With the administration’s specific tax plans still pending, many Wall Street banks have yet to set their expectations. “We don’t have a house view on the financing mix of an eventual infrastructure bill, but all public comments point to higher taxes in core areas of corporate, high-income household and capital gains rate,” JPMorgan Chase & Co. strategists led by John Normand wrote in a note Friday.
—With assistance from Nancy Cook.
This article was provided by Bloomberg News.