[COLUMN] Biden’s tax plan update

PRESIDENT Joe Biden’s $6 trillion budget proposal offers new major initiatives like child and elder care subsidies, generous tax credits for families and the working poor, and free community college.

His huge social programs provide a new safety net for the poor and middle class, courtesy of corporations and the wealthy taxpayers.

President Biden’s spending proposals include:

• Subsidize child care by putting a cap of 7% of parent’s income for children under age 5.
• Provide free preschool to all 3- and 4-year-olds.
• Extend generous increase in the per-child tax credit from $2,000 to $3,600 for children up to 6 years old and $3,000 for older children.
• Provide two years of free community college to all Americans.
• Create a national family and medical leave program.

To pay for these social programs, President Biden wants to:

• Increase IRS audits to crack down on tax gap.
• Increase the top individual tax bracket from 37% to 39.6%.
• Increase corporate tax rate from 21% to 28%.
• Increase capital gains taxes on wealthier investors.
• Eliminate the tax-free rates on inherited capital gains (Step-up-in basis).

The budget incorporates the administration’s eight-year programs as follows:

• $2.3 trillion for infrastructure.
• $1.8 trillion for American Families Plan.
• $1.5 trillion for annual operating expenditures for the Pentagon and domestic agencies.

But there’s resistance to Biden’s blueprint for higher taxes and spending.

• Republicans are expected to criticize the President’s “tax and spend” agenda.
• Democrats control Congress and could pass Biden’s tax increases anyway.
• But it only takes one or two Democrats to defect and place a roadblock to his tax agenda.

Tune in to future updates as I monitor progress of President Biden’s tax agenda.

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Victor Santos Sy, MBA. CPA (Retired)

Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation.

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He retired after 50 years of defending taxpayers audited by the IRS, EDD, BOE and other governmental agencies.  He published a book on “How to Avoid or Survive IRS Audits” that’s available at Amazon. Readers may email tax questions to [email protected].