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Greg O’Brien, CPA, CTS
March 15, 2024

Biden's 2025 Tax Plan: What You Need to Know

The Biden administration is making waves with its innovative tax proposals. The central idea is to generate additional revenue, and provide tax relief to working families. These tax policies are expected to have significant implications for the wealthy.

Biden's Tax Proposals: A Tax Strategist’s Perspective 

The Biden administration is aiming for a significant overhaul of the tax system. The primary targets are high-income individuals and large corporations. Simultaneously, it aims to provide relief to working families through expanded tax credits.

An Overview of Corporate Tax Increases

The Biden tax plan proposes to increase the corporate tax rate from 21% to 28%. It also aims to raise the corporate minimum tax from 15% to 21%.

Arguments For and Against Corporate Tax Increases

The administration argues that these increases will ensure corporations contribute their fair share, especially as they have benefited significantly from previous tax advantages. However, critics suggest that higher corporate taxes might reduce American businesses' international competitiveness and deter investment.

Taxation of Wealthy Individuals

Another significant proposal is the introduction of a Billionaire Minimum Tax of 25% for the wealthiest taxpayers. Also, the tax rate on corporate stock buybacks could rise from 1% to 4%.

Arguments For and Against Taxing Wealthy Individuals

The administration believes that these measures will ensure tax fairness, with the wealthiest individuals paying taxes comparable to average workers. However, critics argue that such taxes could hinder investment and savings, impacting economic growth negatively.

Expansion of Tax Credits

The Biden administration is proposing to permanently expand tax credits for health insurance. It also aims to make the Child Tax Credit fully refundable and extend the Earned Income Tax Credit for childless workers.

Arguments For and Against Expansion of Tax Credits

These initiatives aim to decrease costs for workers and families, offering them greater financial security and reducing child poverty. Critics, however, suggest that making tax credit expansions permanent could escalate the federal deficit if not balanced by other revenue-generating measures.

Closing Loopholes and Addressing Tax Evasion

Various tax loopholes will be eliminated under the Biden tax plan. These include those associated with carried interest, estate and gift taxes, and life insurance.

Arguments For and Against Closing Loopholes

Closing loopholes is intended to create a more equitable and efficient tax system, ensuring all taxpayers fulfill their obligations. However, opponents may argue that it could complicate tax planning and have adverse effects on specific industries or investment strategies.

International Tax Reforms

The Biden tax plan proposes enforcing a global minimum tax and enhancing the taxation of corporate foreign income.

Arguments For and Against International Tax Reforms

This proposition aims to halt the race to lower corporate tax rates and level the playing field for American businesses. Detractors may contend that a global minimum tax could disadvantage U.S. companies if other countries do not adopt similar measures.

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