What US and international taxpayers need to know about Biden’s tax policy proposal (Green Book)

Article 22 June 2021 Experience: Tax

The Green Book is effectively President Biden’s wish list for future tax policy to provide funding for his proposed budget. It is a proposal. It is not yet legislation and it is clearly not law. It is an insight into where changes in the tax code might occur. For taxpayers, it is important to understand what types of transactions will be impacted if part or all of the Green Book becomes law. This note is intended to be a quick overview of the Green Book focusing on its impact on private clients. It is not an exhaustive analysis of all provisions of the Green Book.

Given the razor-thin Democratic majorities in the House of Representatives and the Senate, President Biden would need near Democratic unanimity in the House, and could not lose a single Democratic Senator if he hoped to enact the Green Book. The Green Book supports Biden’s political agenda as well as serving as a proposed blueprint for the U.S. Tax Code. Most of the proposals in the Green Book have been included in President Biden’s tax positions since the early Democratic primaries, but the Green Book does contain some surprises.

It is as important to understand what President Biden omitted from the Green Book as well as to consider what he included. There is no discussion of Estate Tax increases, Estate Exemption decreases or a reduction or curtailment of Qualified Business Income under §199A for owners of passthrough entities. The proposal to impose the OASDI portion of Social Security on wages or self-employment income at or above $400,000 is not included. A broad reinstatement of state and local tax deductions is also absent. This is not a guarantee that these proposals may not ultimately be included in legislation.

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