The Biden administration released a proposed budget that would make several substantial changes to current tax law, according to CNBC.
The big picture: The $5.8 trillion budget request includes a significant investment in defense and projects a decline in federal spending as pandemic support programs wind down.
The pay-fors: The budget request also includes changes to current tax policy. These changes, which would require congressional action, include the following:
- Increase corporate tax rate: Raise the corporate tax rate from its current level of 21% to 28%.
- Increase individual tax rate: Increase the top individual tax rate from 37% to 39.6%.
- Increase the capital gains tax rate: Raise the top capital gains tax rate from 20% to match the top individual tax rate.
- Impose a high-net-worth tax: A new proposal would place a 20% minimum tax on the top 0.01% of earners and households worth more than $100 million.
- Modify the international tax rules: The budget proposes to increase the global minimum tax burden (GILTI) and replace the current BEAT regime with a new system that would increase taxes by approximately $240 billion over the next decade.
Our take: “Manufacturing is a capital-intensive industry that requires significant investments in long-lived machinery, equipment and research and development—and proposals like these make it harder to invest in new resources, create jobs and drive growth,” said NAM Managing Vice President of Tax and Domestic Economic Policy Chris Netram. “Right now, manufacturing has the largest economic multiplier effect and drives more innovation than any other sector. But policies that raise taxes on manufacturers make it harder for the next manufacturing dollar to be invested in America, hurting the sector’s ability to grow family-supporting manufacturing jobs, innovate and remain competitive in today’s global economy.”
Our plan: Check out the NAM’s tax plan here.