With the approach of the November election, voters are starting to closely examine the two leading presidential candidates and their proposals on taxes and other issues. While many have an understanding of tax policies that have been enacted during President Trump’s term, there recently has been increased focus on tax proposals offered by former Vice President Joe Biden, the presumptive Democratic nominee.
The outlook for individual tax legislation in 2021 also will depend on which party controls the House and Senate in the next Congress. President Trump was able to enact the 2017 federal tax reform legislation with a Republican-controlled Congress during his first two years in office, before Democrats gained control of the House following the 2018 midterm elections. Prospects for a Biden administration instituting a significant tax overhaul will hinge on whether Democrats take control of the Senate while also retaining control of the House.
The following discusses the individual tax proposals offered by President Trump and former Vice President Biden.
NOTE: In addition to the proposed Federal legislation being discussed, individuals should be mindful of the legislation proposed by states in an effort to increase their revenue. New York State’s recent proposals, including a mark-to-market tax and an increase in their top tax rate are discussed further in PwC’s Insight, New York State considers revenue raising proposals. Similarly, California has recently proposed a Millionaires Tax, which would put into place a 1%, 3% or 3.5% surcharge on taxpayers with adjusted gross income over $1 million, $2 million, and $5 million; respectively.
Despite who wins the election, the tax proposals outlined above by President Trump and former Vice President Biden may still take some time to be transformed into legislation, but individuals should consider the impact of the proposed changes to their cash flow planning, as well as any wealth transfer planning that they may be considering.
Personal Financial Services Leader, PwC US