Status on Biden’s Build Back Better Agenda 

We all know President Biden’s Build Back Better agenda. We all know it’s going to cost us trillions of dollars to implement. Yet, it’s strange that the government’s plan to slash the initial budget from $3.5 trillion to $1.7 trillion was, to some people, welcome news. It’s still trillions of dollars, and the taxpayer is still going to pay for it, so why aren’t we talking about where most of the money’s going and how we’ll pay for it? First of all, the government claims that it’s going to cost us “zero dollars” when we know for a fact that they’ll get the money from our taxes. So, we’ll essentially pay more taxes, which our children’s children will also have to pay. Plus, raising taxes on the wealthy and corporations to pay for the legislation is never a great idea due to its impact on encouraging the entrepreneurial spirit. But on the flip side, health care coverage expansions and more funding for HBCUs is something we all look forward to seeing getting implemented.  

Core Message About Taxes From the Build Back Better Plan 

According to Biden’s proposed agenda, the Build Back Better plan will create millions of good-paying jobs and help ease the burden of high costs facing working families. The plan will also make sure the wealthy and big corporations pay their “fair” share of taxes. But the question on most people’s lips is how do you define “fair?” Most Americans are in favor of more taxation on the rich. They make more money, so they should be taxed more. But under the latest iteration of Biden’s proposal, the average top tax rate on personal income would reach 57.4 percent, making the U.S. one of the highest rates in the Organisation for Economic Co-operation and Development (OECD). Mind you, if the country becomes the highest in the OECD, the rates will damage U.S. competitiveness and reduce incentives to work, save, invest, and innovate within the U.S. economy. Nonetheless, the top 1% in the country made more money during the pandemic than everyone else, so there’s some argument on why they should pay more taxes. 

Billionaire’s Income Tax 

One of the most controversial tax proposals in Biden’s Build Back Better plan is a Billionaire’s Income Tax plan. First, the reform would require billionaires to pay annual taxes on their increased wealth each year. But we all know most billionaires boast illiquid capital, so one major concern is how they’ll pay their taxes. Secondly, under current law, taxpayers pay taxes on capital gains when they sell an asset for a profit and realize gains. But in the proposed law, the bill aims to tax the unrealized capital gains on stocks and other assets owned by billionaires, which, to most people, does not make sense. 

The Stepped-Up Basis

The new proposed tax laws aim to expand the inheritance tax on wealthy Americans dramatically. Biden’s administration proposed ending the famous “step-up in basis,” a statement that allows heirs to use the market value of estates at the time of inheritance as the cost basis for capital gains taxes. In other words, the stepped-up basis essentially wipes out previous taxable gains on inherited assets, allowing heirs to start from scratch. However, the new law proposes that past gains be taxed upon the owner’s death at the current market valuation.  

Coming soon: Resources for Understanding Biden’s Proposed Tax Laws

Listen now to learn more about Biden’s Build Back Better Tax and Spending Proposal.