For 2021, the top marginal rate applies to: Presently the top marginal personal income tax rate is 37% and applies to the taxable income of taxpayers over a certain amount. The plan provides that the top marginal personal income tax rate will be increased to 39.6%. Q: How would the plan impact income tax rates? In the discussion that follows, we assume the plan is enacted as proposed. As each person’s financial and tax situation is unique, before changing your plans based on administration proposals or proposed legislation, you should talk with your attorney, accountant and other tax and financial advisors. This commentary, therefore, is speculative. Additionally, as with all policy proposals, it is far from certain what will ultimately be enacted, if anything. Nevertheless, as the proposals are reviewed, it is necessary to recognize that they are found in a statement released by the White House summarizing President Biden’s public announcement, and that legislation to enact the plan has not yet been submitted to Congress. This article will review some of the proposed changes to the federal personal income tax proposed by the plan and some of the tax benefits the plan hopes to offer.
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Importantly, these reforms will also rein in the ways that the tax code widens racial disparities in income and wealth. The plan will also eliminate long- standing loopholes, including lower taxes on capital gains and dividends for the wealthy, that reward wealth over work.
It will ensure that high-income Americans pay the tax they owe under the law - ending the unfair system of enforcement that collects almost all taxes due on wages, while regularly collecting a smaller share of business and capital income.
The President’s tax agenda will not only reverse the biggest 2017 tax law giveaways, but reform the tax code so that the wealthy have to play by the same rules as everyone else. The White House statement characterizes the resulting changes to the income taxation of individuals as “Tax reform that rewards work - not wealth” and describes the proposed changes as follows: The American Families Plan needs revenue to accomplish its goals. The American Families Plan is an investment in our children and our families - helping families cover the basic expenses that so many struggle with now, lowering health insurance premiums, and continuing the American Rescue Plan’s historic reductions in child poverty.” The White House release states that “the American Jobs Plan and the American Families Plan are once-in- a-generation investments in our nation’s future. On April 28, 2021, President Joseph Biden proposed The American Families Plan (the plan) and issued a fact sheet (the fact sheet) outlining what the plan is intended to accomplish and from where revenue will be generated to implement the plan.
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