Budget season is officially underway in Washington as the White House has proposed a $6 trillion federal budget for the next fiscal year, with plans to raise taxes on corporations and wealthy individuals.
The proposed budget released May 28 includes two proposals President Joe Biden unveiled in March and April, respectively — the American Jobs Plan, a $2.7 trillion package focused on infrastructure improvements, and the American Families Plan, a $1.8 trillion plan to reduce child care costs and boost education access. Those plans would be paid for over multiple years.
The Treasury Department, also on May 28, released its "General Explanations of the Administration's Revenue Proposals," known as a "Green Book," for the first time since the Obama administration. The Green Book outlines the proposed changes to the federal tax law.
Included in the Greenbook are proposals to raise the corporate tax rate to 28% from 21% and the top marginal income tax rate for individuals to 39.6% from 37%. It would tax long-term capital gains and qualified dividends for taxpayers with adjusted gross incomes of more than $1 million at ordinary income tax rates. Currently, most realized long-term capital gains and qualified dividends are taxed at graduated rates under the individual income tax, with 20% generally being the highest rate (23.8% including the net investment income tax, if applicable), Treasury noted in the Green Book.
Fiscal year 2022 starts Oct. 1 and Congress has the ultimate say on what the budget will look like. The White House has already received pushback from Republicans and a few Democrats on some of its revenue-related proposals, like raising the corporate tax rate to 28%. Negotiations and debates will likely intensify in the coming months, but Democrats control both the House and Senate.