Democrats have begun to outline their tax priorities as they prepare to gain a governing majority in Washington.
President-elect Joe Biden unveiled a $1.9 trillion stimulus plan last week that contains a handful of major tax provisions, including:
- Providing a new round of $1,400 stimulus checks for each taxpayer and dependent
- Making the Child Tax Credit (CTC) fully refundable and permanently increasing it to $3,600 for children under the age of six and $3,000 for children under the age of 17
- Allowing children aged 17 to qualify for purposes of the CTC in 2021
- Expanding the Earned Income Tax Credit (EITC) for childless adults to nearly $1,500 and raise the maximum income for the credit to roughly $21,000
Biden’s plan also extends the emergency sick pay and paid family leave requirements enacted by the Families First Coronavirus Relief Act (FFCRA) through Sept. 30, 2021. The requirements would be imposed on all employers, regardless of size, but the offsetting tax credits provided by the FFCRA would only be extended to those with less than 500 employees.
Biden’s ability to enact his agenda has received a boost following Democratic victories in the recent runoff elections for both Georgia Senate seats. The two flips bring the Senate to a 50-50 tie with Vice President-elect Kamala Harris to serve as tiebreaker. Although this puts Democrats back in control of the chamber, it is only by the slimmest of majorities and compromise with Republicans may be necessary with 60 votes needed to avoid a filibuster.
Still, Democrats in Congress have suggested they will continue to push for longstanding tax priorities. Incoming Senate Finance Committee Chair Ron Wyden (D-Ore.) has indicated he intends to advance a proposal to impose mark-to-market taxation on capital gains. He has also suggested he would seek to increase the corporate tax rate. Democrats on the House Ways and Means Committee have also released a framework of priorities, including enhancements to the Work Opportunity Tax Credit, New Market Tax Credit and incentives designed to bolster retirement investment and savings.
Dustin Stamper is a managing director in Grant Thornton’s Washington National Tax Office and leads the tax legislative affairs practice for the firm.
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