White House outlines proposed tax changes

Accompanying President Biden’s fiscal year 2024 budget, the administration today released its “Green Book,” which includes proposed tax changes likely to be pursued in the coming year along with supplements to the announced budget. Many items are similar to those originally proposed in 2021’s Build Back Better proposal that were not enacted through the Inflation Reduction Act.

Among other things, the administration wants to quadruple of the corporate stock buyback excise tax to 4%, bump up the corporate income tax to 28% from 21%, and increase the global intangible low tax Income effective rate for multinational company foreign earnings as part of implementing the U.S. portion of the global agreement to set a minimum corporate tax rate.

The proposed changes would also make the New Markets Tax Credit permanent and create a new housing credit program—the Neighborhood Homes Credit—targeting affordable owner-occupied housing. Other key proposals are largely consistent with prior year issues: repeal of the “like kind” exchange for various transactions; increase the top individual rate to 39.6%; tax capital gains at ordinary rates; eliminate carryover basis for estates and other transfers; institute a 25% minimum tax on unrealized capital gains for very wealthy individuals; and address carried interest taxed as ordinary income, among other things. Business income of some S corporation shareholders would be subject to the net investment income tax of 3.8%. Further, there was no mention of extending the current “Section 199A” deduction for S corporation shareholders, which is scheduled to expire in 2025.

Also omitted was a proposal requiring financial institutions to report information about customer accounts. Instead, expanded reporting of some foreign accounts, taxation of certain digital asset transactions, and the requirement for electronic returns by some taxpayers are intended to increase taxpayer compliance. There remains the possibility that the bank account reporting provision could be reintroduced through future legislation.