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On Wednesday, April 28, 2021, President Biden unveiled the American Families Plan, a sweeping $1.8 trillion plan to expand educational opportunities and child care for families, funded in part by tax increases focused on the wealthy. The plan would make pre-kindergarten and community college free across the country, extend the child tax credit through 2025 and make permanent an expansion of the earned income tax credit to childless adults with low incomes, provide direct support to families for child care, finance teacher training and create a national paid family leave program. The following are key tax changes to fund this plan:
- Income Taxes - Biden is calling to raise the top personal income tax rate to 39.6% for those among the highest 1% of earners.
- Capital Gains - Biden would increase the capital gains rate to 39.6% from 20% for those earning $1 million or more. A 3.8% Obamacare tax on investment would then be added on top, meaning those earning over $1 million would pay a 43.4% federal rate on realized investment returns.
- Step-up basis – Biden is planning on ending the practice of “stepping-up” the basis for gains in excess of $1 million ($2.5 million per couple when combined with existing real estate exemptions) and making sure the gains are taxed if the property is not donated to charity. The proposal includes a provision that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business.
GCCA continues to work with coalition partners to address a variety of tax policies, including a recent coalition letter supporting the Death Tax Repeal Act. GCCA also has an active grassroots campaign opposing tax increases proposed under the American Jobs Plan. Please consider TAKING ACTION by participating in the campaign and contacting your elected officials.
Read the full American Families Plan HERE.