Tax Increases on the Horizon?

Proposed Budget Spending Plan Would Indicate A Need for Increased Revenue.

It’s going on two months since President Biden shared his American Jobs Plan (AJP) and almost one month since his joint session in Congress where he shared his American Families Plan (AFP). We highlighted the major talking points of those plans in earlier articles (Introduction to The American Jobs Plan and The Made in America Tax Plan;  The American Families Plan – Proposed $1.8 Trillion Spending and Tax Plan).  The full details of those plans have still not been released though they may be getting a little closer.  

Earlier today, the New York Times released an article noting that the President plans on releasing a proposed $6 trillion dollar budget tomorrow; further, the budget is proposed to increase to $8.2 trillion by 2031.  For some perspective on the size, the Congressional Budget Office in 2010 reported the 2010 fiscal budget ending September 30, 2010 was $3.5 trillion.  The Times article notes that the growth is driven by the plans outlined in the AJP and AFP (or the Plans).   The President’s proposed budget is a request; ultimately it is Congress that controls the purse.  

As was clear when the Plans were released, President Biden’s plan to fund these programs and initiatives is, in part, to raise taxes on corporations and high-income earners (above $400,000).  Specific details are still being worked out.   

However, more details, though not specific statutory language, may soon be forthcoming.  Historically, the U.S. Treasury Department has issued a “Green Book” in conjunction with budget releases.    The publication details how much revenue could be raised from the President’s tax proposals.  Businesses, individuals, and tax professionals are expected to find some direction on the size, breadth, and timing of any tax increases proposed.  While the Green Book was eliminated under President Trump, its issuance has been revived under the Biden Administration.

When the Green Book is released, its contents will be analyzed, and the results shared with you.  In the meantime, taxpayers generally need to be patient but alert to its potential impact.  There is still a lot of distance that needs to be covered before a final bill will cross the finish line and await the President’s signature in the Oval Office.