Making Good on Tax Promises, Sort Of
The Green Book is back. Officially “The General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals,” the volume includes detailed descriptions of President Biden’s tax plans. Required beach reading for tax geeks, just in time for summer. Former President Trump scrapped the long tradition of issuing the Treasury report to supplement the annual budget.
Biden keeps a business tax deduction. Owners of closely held businesses will still be able to deduct 20 percent of business income they report on individual tax returns. During the campaign, Biden suggested dumping the tax break for those making $400,000 or more. TPC’s Bill Gale, was “a little surprised that the Biden administration didn’t propose curtailing” the deduction, which he said “just seems to be kind of without redeeming qualities.”
And Biden, as promised, would raise taxes on corporations and the wealthy. The president’s budget also includes $3.6 trillion in tax increases designed to fund efforts to combat climate change, reduce income inequality, and expand the nation’s social safety net. Starting at the end of 2021, the top individual income tax rate would rise to 39.6 percent from 37 percent for married couples filing jointly who make $509,300 or more and to single filers making $452,700 or more.
Biden’s budget also proposes cuts to fossil fuel tax benefits. The budget proposes to eliminate fossil fuel industry tax benefits including those for enhanced oil recovery and deductions for wages, repairs, supplies, and other oil and gas drilling expenses. Repealing the provisions would generate $35 billion in revenue over ten years.
International tax talks continue. The Hill summarizes where negotiations stand on a global minimum tax rate and other rules on taxing corporate profits. Even if organizations such as the OECD reach consensus, member countries still will need to change their domestic laws and relevant tax treaties to implement any agreement.
Just in time for alfresco dining in the summer: An end to the three-martini lunch? Democratic Rep. Suzanne Bonamici and Republican Rep. Peter Meijer introduced a bill to eliminate the tax deduction for business meals and use the revenue for child care. Congress temporarily restored the tax break last December at the request of then-President Trump.
Congress is not in session. The Daily Deduction will resume its weekly schedule when Congress returns.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at email@example.com.