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By Alistair M. Nevious, J.D.

May 28, 2021

President Joe Biden’s administration unveild its proposed budget for fiscal year 2022 on Friday. Treasury says the $6 trillion proposed budget focuses on infrastructure, clean energy, and research and development, and among its many provisions are a host of proposed tax changes affecting individuals and corporations.

One set of tax and revenue proposals, named the American Families Plan, would increase taxes on high-income individuals, make permanent various recent tax credit expansions, further limit like-kind exchanges, and address various tax administration issues, including regulation of paid tax return preparers.

Other proposals are grouped under the name American Jobs Plan, and they include a variety of corporate tax changes, including raising the corporate tax rate and imposing a minimum tax on corporations, tax incentives to support housing and infrastructure, and clean energy incentives.

Along with the proposed budget, Treasury released its General Explanations of the Administration’s FY2022 Revenue Proposals (Greenbook), which explains the budget’s revenue proposals. In a prepared statement, Treasury Secretary Janet Yellen described the budget’s revenue proposals as “fair and efficient tax reform.”


The proposed budget would make three changes to the taxation of high-income individuals:

  • Increasing the top marginal income tax rate for high earners form 37% to 39.6% for taxpayers with taxable income over $509,300 for married taxpayers filing jointly and over $452,700 for single filers;

  • Taxing capital gains of high-income individuals (with adjusted gross income over $1 million) at a 37% rate;

  • Imposing capital gain tax on property transferred by gift and on property owned a death; and

  • Rationalizing the net investment income and Self-Employment Contributions Act (SECA) taxes so that all passthrough business income of high-volume individuals is subject to either the net investment income tax or SECA tax.

Other proposed changes include:

  • Making permanent the expansion by the American Rescue Plan Act (ARPA), P.L. 117-2, of premium assistance tax credits;

  • Making permanent the expansion of the earned income tax credit (EITC) for workers without qualifiying children;

  • Making permanent ARPA’s changes to the child and dependent care tax credit;

  • Extending ARPA’s child tax credit increase through 2025 and making permanent its full refundability;

  • Increasing the employer-provided child tax credit for businesses to 50% of the first $1 million of qualified care expenses;

  • Taxing carried interests as ordinary income for partners with taxable income over $400,000;

  • Limiting the deferral of gain from like-kind exchanges to $500,000 per taxpayer ($1 million for married taxpayers filing jointly) per year;

  • Making permanent the Sec. 461(I) excess business loss limitation for noncorporate taxpayers

To improve compliance and tax administration, the budget proposes:

  • Providing the IRS a multiyear appropriation to address tax evasion;

  • Introducing comprehensive financial account reporting, which would apply ato all business and personal accounts from financial institutions, including bank, loan, and investment accounts above a $600 threshold;

  • Increasing oversight of return preparers by providing Treasury with explicit authority to regulate paid preparers of federal tax returns, including establishing minimum competency standards;

  • Enhancing accuracy of tax information by expanding Treasury’s authority to require e-filing and improving information reporting;

  • Expanding broker information reporting with respect to cryptoassets;

  • Addressing taxpayers noncompliance with listed transactions by extending the statute of limitaion and imposing liability on shareholders to collect unpaid corporate income taxes;

  • Modifying various tax administration rules; and

  • Authorizing limited sharing of business tax return information to measure the economy more accurately.


The proposed budget calls for the following corporate tax changes:

  • Raising the corporate income tax rate to 28% from its current 21%

  • Revising the global minimum tax regime, disallowing deductions attributal to exempt income, and limiting inversions;

  • Repealing the global intangible low-taxed income (GILTI) exemption for foreign oil and gas extraction income;

  • Repealing the deduction for foreign-derived intangible income (FDII);

  • Replacing the Sec. 59A base-erosion and anti-abuse tax (BEAT) with a new “stopping harmful inversions and ending low-tax develpments: (SHIELD) rule;

  • Limiting foreign tax credits from sales of hybrid entities;

  • Restricting deductions of excessive interest of members of financial reporting groups for disproportionate borrowing in the United States;

  • Imposing a 15% minimum tax on book earnings of large corporations; and

  • Providing a 10% tax credit as an incentive for locating jobs and business activity in the United States and removing tax deductions for expenses incurred in connection with moving jobs overseas.

To support housing and infrastructure, the budget proposes:

  • Expanding the low-income housing tax credit;

  • Providing a new neighborhood homes investment homes investment tax credit;

  • Making permanent the Sec. 45D new markets tax credit; and

  • Providing federally subsidized state and local bonds for infrastructure.

In the area of clean energy, the budget proposes:

  • Eliminating various fossil fuel tax preferences;

  • Extending and improving various renewable and alternative energy incentives;

  • Providing a tax credit for electricity transmission investments;

  • Providing an allocated credit for electricity generation from existing nuclear power facilites;

  • Establishing new tax credits for qualifying advanced energy manufacturing;

  • Establishing tax credits for heavy- and medium-duty zero emissions vehicles;

  • Providing tax incentives for sustainable aviation fuel;

  • Providing a production tax credit for low-carbon hydrogen;

  • Extending and enhancing various energy efficiency and electrification incentives;

  • Providing a disaster mitigation tax credit;

  • Expanding and enhancing the carbon oxide sequestration credit;

  • Extending and enhancing the electric vehicle charging station credit; and

  • Reinstating superfund excise taxes and modifying oil liability trust fund financing.

– Alistair M. Nevious, J.D., ( is the JofA’s editor-in-chief, tax.

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