■ Accounting
Continued From Page 22 tax legislative process to know that what is originally proposed may not be what is enacted . For example , President Biden originally proposed raising the corporate tax to 28 percent from 21 percent but in recent discussions he has instead proposed a minimum corporate tax of 15 percent for the nation ’ s largest companies . The political reality is that while the Democrats have control of the House , Senate and the White House , the Senate majority will not hold if one Democratic Senator does not vote with the party . This situation is ripe for any one Senator to hold out to obtain some concession . This legislative process will take many twists and turns , and no one knows what the outcome will be , so focus on what you can control and stay abreast of the changes that emerge as the process evolves .
TAX CHANGES
PROPOSED CHANGES :
INCOME TAX RATES CAPITAL GAINS TAX RATES ESTATE TAX EXEMPTIONS
Withum By Jeremias Ramos , CPA , Lead , National Tax Services
There is an important distinction between a policy proposal and actual tax legislation that becomes law . When clients see headlines in the news explaining how “ their taxes are going up 100 percent ,” it ’ s often cherry-picked from the most aggressive tax increase proposals that often don ’ t stand a chance of getting passed . The reality is taxes are going to increase , but to what extent ? Will capital gains be taxed at ordinary rates ? Will the step-up in basis after death be a relic of the past ? Will corporate rates or individual rates go back to pre-TCJA levels ? The ultimate outcome can ’ t be known , but we can take some guesses at what ’ s plausible . Although the Democrats control both chambers of Congress and the Oval Office , passing tax increases won ’ t be easy . With 50 votes in the Senate , Democrats would need every Senator ( liberal , moderate and conservative ) to sign onto a tax increase . This means that extreme proposals like a wealth tax , taxing capital gains at ordinary rates and substantial changes to the estate tax are probably not going to pass . Given that narrative , clients may want to reconsider taxing themselves now by speeding up the recognition of capital gains and ordinary income .
SCAN OR CLICK TO STAY INFORMED
Many small businesses are beginning their recovery from the pandemic .
Photo : Getty Images / iStockphoto
24 COMMERCE www . commercemagnj . com