Within the first 100 working days, the new president-elect of the United States Of America, Joe Biden has initiated a new tax plan for all Americans. During the presidential campaign, President Joe Biden told ABC News of his plans to boost the Americans' finances by increasing taxes on wealthy Americans and various companies. President-elect Joe Biden, released a tax plan before the election, would pass several policies that would increase taxes on individuals with an income-earning above $400,000, including increasing individual income, capital gains, and payroll taxes.
With the Democrats in charge of the presidency and congress, Biden's possibility of implementing his new tax plan has been improved. Still, his early plans as the newly elected president are to amend the American economy that has been badly affected by the pandemic and navigate a slender Democratic Senate Majority.
Below are the proposed reforms of President Joe Biden's tax legislative agenda.
Expanding the child tax credit
A press conference was held where the president-elect unveiled his $1.9 trillion stimulus plan that includes a drastic change in the Child Tax Credit, and the Earned Income Tax Credit.
For one year, Joe Biden's covid- 19 scheme will temporarily increase the Child Tax Credit to $3,000 for every American child, between the ages of 6 and 17, and $3,600 dollars for children under age 6. In addition to this plan, Biden has promised to make the credit fully refundable for one year.
Under the old tax law, taxpayers claimed the child tax credit was up to $2,000 per child under the age of 17; the credit was refundable was up to $1,400 for each qualified child which means that you can be refunded up to this amount if you do not owe taxes.
The president's agenda expands the eligibility for the child dependent care tax credit and allows up to $8,000 For qualified expenditures of low and middle-income working families.
This change would increase the current credit amount from $3,000 to $8,000 and provide $16,000 for multiple dependents.
Not every American would be qualified for this service. The amount would depend on your Modified Adjusted Gross Income ( MAGI ). Your gross income would be regulated for certain deductions and income.
The credit would gradually phase out For American taxpayers whose MAGI is above $200,000, and for couples filing a joint return of $400,000.
Increasing the earned income tax credit
Biden's plan also seeks to enhance the Earned Income Tax Credit ( EITC ) for the entire year. Biden has proposed to increase the EITC of adults without children from $530 to $1500, and also increase their income limit from $16,000 to $21,000.
This expansion of the EITC would boost the earnings of many working-class Americans. And although Biden's tax plan would primarily affect wealthy American citizens, the low and middle wages households stand a chance of benefiting from the increased tax credit as outlined by Joe Biden's Administration.
As the President-elect proceeds forward with his tax plan, He may be faced with some obstacles. As he expands his new tax policy, his administration would require unanimous approval from the slim senate majority, and support from some republicans.
Security tax expansion to 50%
Under Biden's tax plan, social security tax would be expanded to high-income levels and the estate tax exemption would be brought down approximately 50%.
Annual income tax rate for corporations
Lastly, the administration would impose a new minimum tax rate of 15% on corporations with over $100,000 million annual income that pays little or no federal income tax under the regular rules.
This new tax law would raise an estimated amount of $160 billion to $320 billion within 10 years.
With the tight Democratic control of the house and the senate, we may likely not see any early changes in the tax law, outside the proposed child tax credit and the earned income tax credit as so far that is just a temporary policy.
However, the rest of his tax plan would likely be proposed later in his tenure.