As you may already be aware, the Biden administration released its 2023 budget proposal yesterday, which includes a new tax on certain multimillionaires and billionaires.  The proposal would impose a minimum tax of 20 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) of an amount greater than $100 million.

This budget blueprint, which is nonbinding, is estimated to add an additional $360 billion in revenue over 10 years, according to the White House. Over half of the revenue is projected to come from households worth more than $1 billion.

In addition to the billionaire tax, the budget also outlines the following tax proposals:

• Raise corporate tax rate to 28% from 21%. The Tax Cuts and Jobs Act cut the corporate tax rate to 21% from 35%, effective January 1, 2018.

• Provide a 20% increase in the discretionary funding for the Treasury Department ($16.2 billion total). This includes $798 million toward improving taxpayer experience and customer service and $310 million for digital modernization of systems.

• Prevent multinational corporations from using tax havens. The budget cites 130 countries that agreed in 2021 to a global minimum tax but argues that large companies operating in the U.S. "undercut the global minimum" through tax havens.

• $50 billion in mandatory and additional Low-Income Housing Tax Credits (LIHTC). The LIHTC would also be modified to incentivize new housing developments, costing an estimated $10 billion over 10 years.

• Provide $1.2 to the Environmental Protection Agency's Superfund program. According to the budget, this would allow the EPA to "begin to adjust for revenue" from the new Superfund Excise Tax enacted in the Investment and Jobs Act of November 2021 to fund chemical cleanup projects.

Please note that these proposals are very preliminary, and there have been a number of criticisms previously raised about a similar “billionaires income tax” bill introduced in October and other types of “wealth tax” proposals.  It’s our preliminary sense that it’s very unlikely that these proposals would be enacted in their current form.

We will monitor the progress of this proposed budget and send updates should there be any significant developments regarding it.

Thanks,

Lucid Vesper - US Tax Team