Biden Administration’s FY 2025 Revenue Proposals

The U.S. Treasury Department on May 11, 2024, released the “Green Book,” which is the Treasury’s “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals.” This 256-page document details the tax proposals in the Biden Administration’s FY 2025 budget, also released and transmitted to Congress.

These proposals, as explained in the Green Book, aim to increase and reform corporate taxation and raise individual taxes to “reduce the deficit by cracking down on fraud, cutting wasteful spending, and making the wealthy and corporations pay their fair share.” Here are some key proposals included in the Green Book:

  • Increase the corporate rate to 28% from the current 21%
  • Increase the CAMT rate to 21% from the current 15%
  • Increase the global intangible low-taxed income (GILTI) rate to 21% from the current 10.5%
  • Repeal the foreign-derived intangible income (FDII) deduction, which was enacted by Trump to provide a tax break for businesses in export and effectively reduced the corporate tax rate to 13.125% for qualifying taxpayers
  • Quadruple the stock buyback tax from the current 1%
  • Deny the deduction for all compensation over $1 million for all C corporations
  • Eliminate tax-free treatment of like-kind exchanges
  • Strengthen the limitation on losses for noncorporate taxpayers
  • Increase the top individual income tax rate from the current 37% to 39.6%
  • Increase the Medicare rate and net investment income tax rate to 5% from the current 3.8%
  • Apply the net investment income tax to pass-through business income
  • Impose a 25% minimum tax on those with wealth exceeding $100 million
  • Tax capital gains at ordinary rates for households with over $1 million in earnings
  • Tax unrealized gains at death

The Biden administration proposes these tax hikes to control the current inflation crisis and promote “equality” and “equity.” In theory, raising taxes can potentially ease inflation and reallocate wealth to those in need, but it can also slow down the economy, resulting in higher unemployment and reduced economic growth, and decrease everyday people’s buying power—a situation known as “stagflation.”

We expect strong pushback from Republicans on the proposal, and it is likely that the proposal will face significant challenges in Congress. Therefore, enactment of these proposals is unlikely. However, taxpayers should keep an eye on developments.

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