Over the past few weeks there have been several tax reform proposals released to the public, including those contained in President Biden's "American Families Plan." Below, we summarize some of the notable proposed changes that would influence wealth planning and high-level considerations.
It is premature to assume any of the recent proposals will be passed by Congress, as they will likely be subject to significant debate and modifications.
Among the proposed legislative and policy changes are the following:
- Increasing audits and enforcement of high-income taxpayers.
- Restoring the pre-TCJA top income tax rate to 39.6%.
- Raising the capital gains tax rate to 39.6% for households earning more than $1 million.
- Repealing step-up basis treatment of inherited assets for gains in excess of $1 million.
- Imposing a capital gains tax on lifetime gifts of capital assets with unrealized appreciation.
- Subjecting carried interest income to ordinary income tax rates.
- Ending the Section 1031 like-kind exchange rules for high-value real estate.