The Biden Administration’s budget has hit! There’s a lot to focus on with this budget. The headlines will tell you about the shift in spending away from Defense and to domestic programs, including renewable energy. These are real battleground concepts in the face of the peer military risks members of Congress have been listening to over the previous weeks.
Once you look deeper, the real meat in this plan is the social spending on universal preschool, family leave, and child care credits. These programs represent a small portion of spending in 2021, but would lock in much higher levels of spending in the following years for planned expansion to all living in the United States.
All of this will be paid for with higher income tax rates and a beefed-up and aggressive IRS.
The budget plan will evolve over the next several months, but there are two important items to note:
- Budget reconciliation is already on the table. Reconciliation has already been used in this fiscal year, it would appear the bill cannot use reconciliation until the next fiscal year which begins October 1.
- Capital gain rates as high as 43% will be RETROACTIVE to April 28. In a WSJ article dated May 27, an unnamed “White House official” states the effective date would be timed to prevent taxpayers from taking advantage of the change in the tax rates.