Biden’s Proposed Tax Increases in Simple and Multivariate Charts

The Tax Cuts and Jobs Act, the 2017 tax reform and simplification law, reduced individual and corporate federal income tax rates. President Biden has proposed to increase those rates. Corporate tax increases have been proposed to pay for a $2 trillion infrastructure plan, while individual tax increases are anticipated to pay for other spending programs.If those tax increases take effect, New York City resident individuals may be subject to combined federal, state, and local marginal income tax rates of over 65%, while corporations and their shareholders subject to New York City taxes may have a combined marginal tax rate of over 75%. Some decedents’ estates would pay marginal income and estate taxes that add up to over 80%. The higher tax rates could encourage migration to lower-tax states, expatriations to lower-tax countries, greater personal consumption spending by the wealthy and elderly, and other taxpayer responses.This article examines, using charts and figures for both readers and visual learners, the potential outcomes under President Biden’s current and future proposed tax increases for individuals and corporations. It focuses on the highest statutory marginal income tax rates and does not address phaseouts of tax benefits that may result in even higher marginal tax rates, including the approximately 65% marginal federal income tax rate for individuals subject to the section 199A passthrough business income deduction phaseouts.This article also does not focus on other contemplated tax reforms such as Treasury’s proposal for Stopping Harmful Inversions and Ending Low-Tax Developments (SHIELD) and possible future initiatives that may include Stopping Worldwide Offshoring and Related Developments (SWORD), Bringing Uniformity to Complex and Kaleidoscopic Large Entity Returns (BUCKLER), Harmonizing Asset Mobility and Movement Enforcement and Repatriation (HAMMER), and High-Yield Discount Redemption Adjustment (HYDRA)