In Washington, budget season has officially started as the White House proposed a $ 6 trillion federal budget for the next fiscal year, with plans to raise taxes for businesses and wealthy individuals.
The draft budget, released May 28, includes two proposals that President Joe Biden tabled in March and April respectively – the American Jobs Plan, a $ 2.7 trillion package focused on infrastructure improvements, and the American Families Plan, a $ 1.8 trillion plan to cut childcare costs and improve access to education. These plans would be paid for over several years.
The Treasury Department also published its "General Explanatory Notes on Government Revenue Proposals" known as the "Green Paper" on May 28 for the first time since the Obama administration. The green paper outlines the proposed changes to the federal tax law.
The Green Paper contains proposals to raise the corporate tax rate from 21% to 28% and the top tax rate for individuals from 37% to 39.6%. It would tax long-term capital gains and qualified dividends for taxpayers with adjusted gross income greater than $ 1 million at normal income tax rates. Currently, most realized long-term capital gains and qualifying dividends are taxed at graduated rates under individual income tax, with 20% generally being the highest tax rate (23.8% including net capital gains tax, if applicable), noted Treasury in the Green Book.
Fiscal year 2022 starts October 1st and Congress has the final say on what the budget will look like. The White House has already been pushed back by Republicans and some Democrats on some of its revenue-related proposals, such as raising the corporate tax rate to 28%. Negotiations and debates are likely to intensify in the coming months, but the Democrats control both the House and Senate.