Joe Biden to propose tax hikes, $80 billion for audits of
President Joe Biden will propose a large-scale tax increase and give billions more to the
IRS to make sure rich individuals and large corporations are paying all they owe,
according to a person familiar with his proposal.
The plan will include a top individual tax rate of 39.6% for those making at least
$400,000 and will end an inheritance tax break on capital gains known as “step-up in
basis,” the person said. The proposal will include $80 billion to boost the Internal
Revenue Service’s audit capabilities over the next decade for wealthy individuals and
corporations, a change that could generate $700 billion in revenue, according to the
The measures will be key elements to offset the cost of Biden’s “American Families
Plan” that he’s set to unveil in a speech to Congress on Wednesday. The plan,
estimated to cost about $1.8 trillion, is expected to include funding for paid leave,
childcare and education, funded through tax increases on the rich.
Higher income tax rates for top earners, along with a 39.6% capital gains rate for those
earning $1 million or more, mean that many wealthy taxpayers will see a significant
increase in the levies they owe annually and when they sell major investments, such as
stocks or businesses.
Repealing the step-up in basis provision would end a long-standing tax break that wipes
away the capital gains on an asset when it is inherited, meaning that much of the
appreciation on securities, properties and small businesses goes untaxed when the
original owner dies.
Spending billions more on audit is intended to reverse a multi-year trend of falling audit
rates at the IRS. Commissioner Chuck Rettig told a congressional panel this month that
as much as $1 trillion in taxes may go uncollected each year. He said the agency has
lost 17,000 enforcement personnel since 2010. Democrats in Congress have been
proposing ways to increase audit levels by adding to the agency’s enforc