Eric McGraw
Eric McGraw
The Latest News on Tax Reform

The Latest News on Tax Reform

President Biden’s “Build Back Better” infrastructure framework, first proposed in the Spring of 2021, received a new coat of paint with a press release issued by the White House on October 28th, 2021. The latest version of the proposal is scaled back both in spending, $1.85b compared to $3.75b, and in tax reform. The most controversial tax reform proposals have been dropped, with the remaining proposals focused on large corporations and individuals earning more than $10m per year.

Removed Proposals

The following tax reform proposals have been rumored over the last year, but are no longer included in the plan released by the White House:

  • Increase in Highest Marginal Tax Rate from 37% to 39%
  • Increase in Capital Gains Tax Rate
  • Tax on Unrealized Capital Gains
  • Increase in Maximum Wages Subject to Social Security Tax
  • Reinstatement of Pease Limitation (Limit on Itemized Deductions)
  • Phaseout of Qualified Business Income Deduction
  • Elimination of 1031 (Like-kind) Exchanges
  • Decrease to Estate tax Exemption
  • Elimination of Step-up in Basis at Death
  • Increase in Death Tax Rate from 40% to 45%
  • Increase in Corporate Tax Rate from 21% to 28%
  • Elimination of the Employee Retention Credit for 4Q 2021

Remaining / New Proposals

The following tax reform proposals are included in the plan released by the White House:

  • Individual Surtax of 5% on income over $10m per year
  • Individual Surtax of 3% on income over $25m per year (this would be in additional to the 5% tax)
  • Net Investment Income Tax Revisions – Would possibly include active business income
  • Corporate Minimum Tax of 15% on Book Income over $1b
  • Corporate Global Minimum Tax of 15%
  • Corporate Stock Buyback Surtax of 1%
  • Increased Funding for the IRS to improve compliance with existing tax law

Special Note Regarding the Employee Retention Credit

The Employee Retention Credit is currently still available for the fourth quarter of 2021. The credit is reported on quarterly payroll tax returns. If the credit is requested on a timely filed return the IRS processing time is approximately six weeks. If the credit is requested on an amended payroll tax return, the processing time is approximately six months.

Congress has proposed eliminating the fourth quarter 2021 credit in a completely separate bill. It is possible that this bill will be passed before payroll tax returns can be filed to claim the credit. We recommend you consider this issue with caution.


The revised proposals are good news for taxpayers, but keep in mind that these remain proposals, not law. We recommend that you continue to monitor political news and maintain readiness to act on year-end tax planning.

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