Each year I help over 500 clients file their Canadian and US tax returns as well as plan for both their Canadian and US investment accounts. I also regularly help new US clients plan for their move to Canada.
Although incoming-President Biden will come into office with control of both the House and Senate, the margins in both chambers are razor-thin. The bottom line: passing his proposed tax increases on corporations and individuals making over $400,000 annually might not prove a bit tougher than expected. As explained in a previous blog, the proposed changes include repealing President Trump’s 2017 tax cuts and raising the corporate tax rate from 21 to 28 percent.
Historically, Democrats have argued that wealthy people and corporations are not paying enough taxes. The issue was front and center during the Democratic primaries, during which Biden took a middle ground compared to more aggressive positions by Senators Elizabeth Warren and Bernie Sanders.
The incoming chairperson of the Senate Finance Committee, Senator Ron Wyden, iterated recently that he remains committed to the Biden plan. “If you are a nurse in America taking care of COVID patients, you don’t get to defer paying your taxes. But if you’re a billionaire, you can defer, defer, defer some more and then pretty much never pay any taxes at all,” he said. “My plan would put a stop to that.” (The Hill).
Wyden has also repeatedly stated that he will pay particular attention to what he calls the “corporate tax giveaways” that were peppered throughout Trump’s 2017 legislation. He is also a long-time proponent of closing “the carried interest ‘loophole’ that benefits investment-fund managers, and better target a tax deduction for income from non-corporate businesses” (The Hill).
While some differences among Democrats continue to focus on exactly how to implement tax increases for wealthy Americans, there was general unity in opposing Trump’s tax laws in 2017 and for the need to correct the situation in 2021.
Watch this blog for news on this and other financial issues throughout Inauguration Week.