FY 2022 Federal Budget, Tax Plan Issued by Biden Admin
In late May 2021, the Biden administration released the federal budget for the Fiscal Year 2022 as well as the White House’s proposed tax plans for the same time period. Find out what’s included in the U.S. Treasury “Green Book” and how it may impact American employers around the country.
Biden White House Announces the Federal Budget for Fiscal Year 2022
President Joe Biden released the administration’s Budget for Fiscal Year 2022, which includes detailed proposals for both the American Jobs Plan and the American Families Plan. The $6 trillion budget focuses on investing in the American economy by taking on the following projects:
- Upgrading infrastructure
- Expanding high-speed internet access
- Renewing the nation’s electric grid
- Revitalizing manufacturing
- And plenty more
The White House also released a set of proposals designed to pay for the federal budget, compiled in what’s informally known as “the Green Book.”
What is the Green Book?
The Green Book is a document that includes the presidential administration’s legislative tax proposals to help fund the federal budget. This year’s Green Book is officially named the “General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals.”
Tax Plans Proposed for the Fiscal Year 2022 Federal Budget
The 114-page Green Book includes tax proposals for the Fiscal Year 2022 federal budget. Review six of the most notable plans below:
- Increased Corporate Tax Rate: The White House wants to replace the 21% flat tax rate with a 28% flat tax rate.
- Increased Top Individual Tax Rate: The White House wants to replace the current 37% rate to 39.6%.
- Adjustments to Global Tax Rules: This proposal seeks to discourage companies from offshoring, or moving profits and jobs overseas. The minimum tax rate for these organizations would be raised from 10.5% to 21% and would be calculated on a country-by-country basis to more effectively target tax havens. (Read more about these proposals here.)
- Enact a Minimum Tax on Book Income: For certain large corporations, the plan would implement a 15% minimum tax on “book income,” which is the income companies use to report profits to investors.
- Reform Capital Income Taxation: Another plan proposes to tax long-term capital gains and qualified dividends of taxpayers at ordinary income tax rates for taxpayers with an adjusted gross income of more than $1 million.
- Eliminate Tax Preferences for the Fossil Fuel Industry: The White House wants to eliminate certain tax credits and subsidies available to the fossil fuel industry. If passed, the plan would also restore the rule that polluters must pay into the Superfund Special Accounts to cover the cost of cleanups in contaminated areas.
Is the 2022 Proposed Tax Plan Officially Law?
Not yet. In an article published by law firm Dykema, attorneys point out that because Democrats control both Congress and the White House, “it is likely that some of these proposals will advance in one form or another.”
Still, many of these proposals are part of the Biden administration’s broader vision for the future of the American economy, dubbed the “Made in America Tax Plan.” According to attorneys at the law firm Proskauer Rose, “each of the proposed tax plans in the Green Book will need to be introduced and passed by Congress.”
Employers and HR teams need to keep a close eye on budget developments as the legislation progresses. Some spending and taxation plans may impact staff or operations, yet for many employers, it’s currently too soon to tell if this will be the case.
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