With the outcome of the runoff election in Georgia, Democrats now have a narrow lead in the Senate, which may give President-elect Joe Biden’s tax plan a better chance at passing.
Before the election, Biden released a proposed tax plan that would enact a number of policies to raise taxes on individuals with income above $400,000, including raising individual income, capital gains, and payroll taxes.
Under Biden’s proposed tax plan, the top individual income tax rate for taxable incomes above $400,000 would revert from 37 percent under current law to the pre-Tax Cuts and Jobs Act level of 39.6 percent.
The proposal would also tax long-term capital gains and qualified dividends at the ordinary income tax rate of 39.6 percent on income above $1 million and eliminates step-up in basis for capital gains taxation.
Even though a split Senate gives Biden’s proposals more of a chance, it certainly doesn’t guarantee his initiatives will move forward in-full. Passing a comprehensive tax overhaul will most likely still be a complicated affair.
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