Biden Administration Takes Aim at Tax Loopholes Used by the Country’s Wealthiest 0.1%
Some of America’s wealthiest were in for a surprise last month, after a 114-page document published by the US Treasury included an inconspicuous provision threatening to dismantle some of the most favored avenues rich individuals use to legally avoid paying taxes.
As reported by Bloomberg, the Treasury document— dubbed the “Green Book”— was released in May, and included a number of technical provisions that were previously not discussed when US President Joe Biden revealed his ambitious plans to raise taxes on wealthy Americans back in April. According to the proposal, the Biden administration is eying to dismantle some of the most popular loopholes used by the top 0.1% of wealthiest Americans to legally forego paying taxes over the past several decades.
One of the main targets of Biden’s tax plan are dynasty trusts, which are used by affluent families to refrain from paying taxes across generations of descendants. Under the new provision, trusts would be forced to incur a capital gains tax every 90 years on appreciated assets, and could be imposed as early as December 2030. The “Green Book” also highlights Biden’s plan to charge a capital gains tax on assets transferred into and out of certain trusts, like the grantor trust— which allows rich Americans to relocate funds out of their taxable estates to benefit heirs.
The latest set of measures are part of Biden’s broader plan to raise capital gains taxes on high-earning households, as well as tax unrealized assets at death as well as gifts. The US president has also proposed increasing corporation levies, as well as boosting the IRS enforcement budget.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.