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Biden’s 2023 Green Book: The Billionaire Tax

On March 28, the Biden administration issued its second set of proposals to raise the desired revenue. General explanation of the administration’s revenue proposals for the financial year 2023, (Tea 2023 green book.) These proposals represent the administration’s first comprehensive tax proposals since Build Back Better failed to move forward in Congress late last year. For tax consultants, green book There are always interesting offers for both what’s included and what isn’t. While these proposals may not go ahead, especially given the current Congress, it is useful to see what topics are being considered and to be able to address customer concerns with regard to the proposals.

Definitely, the headliner of 2023 Green The book is the billionaire tax. It is a tax based on wealth, but not a wealth tax as traditionally understood (that is, a tax calculated as a percentage of the taxpayer’s net worth). Conversely, the Biden proposal, while only applicable to individuals meeting a threshold asset, would impose a minimum tax rate on income, profits. And Unrealized profit instead of net worth.

Under the Biden proposal, a taxpayer with a net worth of more than $200 million would have an annual income tax liability of at least 20% of all taxable income and unrealized gains. The tax liability for the initial year can be paid in nine annual installments, while the liabilities for the future year can be paid over five years. The amount of minimum tax paid as a result of unrealized profit can be used as a credit on the future disposition of that asset. The tax has phased provisions for those over $100 million but less than $200 million.

Like Senator Warren’s proposed estate tax, a practical question is how the net asset value will be determined and reported. The Biden proposal requires that people with assets in excess of the threshold file an annual return reporting by asset class total basis and estimated value by December 31. For actively traded assets, the value will be December 31stscheduled tribe value. Assets that are not regularly traded shall be assessed “using an excess of the original or adjusted cost basis, the last valuation event from the investment, borrowing or financial statements, or by other means approved by the Secretary … -Trade assets will not be assessed annually as required and will instead increase between valuations by a conservative temporary annual return (five-year Treasury rate plus two percentage points). Opportunities for IRS taxpayers to appeal through valuation can provide, such as through evaluation.

From the perspective of HNW individuals, the offer is likely to attract attention due to its catchy name and the major new addition this year. However, going into an election year in a Congress that may not push Build Back Better, it’s unclear whether the tax will gain much traction, similar to Senator Weyden’s proposal last year, which Speaker Nancy Pelosi alleged. commonly referred to as a publicity stunt. Senator Manchin has already said the Biden proposal was a “tough one” because you can’t tax people “you don’t have.”

Other notable rate increases for HNW individuals brought back from 2022 green book Raising the top marginal rate for ordinary income to 39.6% for single taxpayers with income over $400,000 and married taxpayers filing jointly with income over $450,000 and long-term capital gains and qualified for taxpayers with higher incomes Including increasing the rate of dividend to 37%. $1 million (40.8 percent including net investment income tax).

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