Call Us(925) 307-5454
Democrats tucked in a trio of little-noticed tax hikes on the high-income people and large corporations
The surprise tax hikes on corporations in President Biden's sweeping coronavirus relief package that combined are worth more than $60 billion.
- One provision extends a cap on how unincorporated business owners can deduct losses against their non-business income to reduce their tax liability. The Democrats' coronavirus plan stops short of undoing last year's provisions, though it does extend the $500,000 limit — which, like much of the Tax Cuts and Jobs Act, is currently scheduled to expire at the end of 2025 — by an additional year.
- Another takes away deductions for publicly traded companies that pay top employees more than $1 million. Another provision cracks down on how multinational corporations do their taxes.
- The third clamps down on how multinational corporations do their taxes.
Democrats ran into problems complying with the stringent budget rules surrounding so-called reconciliation measures like the coronavirus legislation — especially after some wanted to add provisions like one waiving taxes on unemployment benefits.
The tax increases help keep the plan's cost in check and have the political benefit of being abstruse.
Some say the coronavirus package offers a hint of what's to come. It is a signal that Democrats will look to high-income people and large corporations for revenue for the infrastructure package.
Want us to perform a tax assessment of the pre and post-Biden tax law?
Let's chat. You can book an appointment here.
Miguel A. Palma, CPA, PFS, CGMA
Founder of Palma Financial Services, Inc.
Palma Financial Services, Inc. ("PFS")has helped small business owners minimize income taxes and build wealth since 1998.
PFS has achieved positive results for its clients, but our top clients' successes are not typical. Because past performance is not a predictor of future success, you may have more or less success depending on many factors, including your background, experience, work ethic, client base, and market forces. Additionally, at times we may discuss the law or new and pending legislation. Please know our understanding of it is continuously changing. You cannot and should not rely upon these communications for legal, financial, or accounting advice. For the latest updates, set up a time here.