While much attention has been paid to a bipartisan tax bill involving the child tax credit and business tax benefits, other tax proposals are gaining traction. This article rounds up some notable introduced legislation to start the new year.
Tax Excessive CEO Pay Act. Introduced January 19 by Representatives Barbara Lee (D-CA), Rashida Tlaib (D-MI), and Senators Bernie Sanders (I-VT), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), and Ed Markey (D-MA), corporate tax penalties would apply to companies with annual gross receipts of at least $100 million for the preceding three years with differentials between CEO pay and median work pay.
Once this ratio hits 50:1 (i.e., the CEO is paid 50 times more than the typical worker), corporate taxes would be raised by 0.5%. The cap is 5% for ratios over 500:1.
“The American people are sick and tired of CEOs making nearly 350 times more than their average employees while over 60 percent of Americans live paycheck to paycheck,” said Sanders. “At a time of massive income and wealth inequality, the American people are demanding that large, profitable corporations pay their fair share of taxes and treat their employees with the dignity and respect they deserve.”
According to an accompanying FAQ document, the Democratic cohort estimates this structure would raise $150 billion over 10 years if “current corporate pay patterns continue.
Death Tax Repeal Act. Introduced January 22 by Representatives Michael McCaul (R-TX) and Randy Feenstra (R-IA) and cosponsored by 161 lawmakers, this bill would fully repeal the estate and generation-skipping transfer taxes (Code Sec. 2210 and Code Sec. 2664).
“The death tax represents double taxation at its worst,” said Feenstra. “Iowa families grieving the loss of a loved one should not face an enormous tax bill from the federal government just to continue the family tradition of farming or keep their small business open and operational.”
For 2024, under current law, the estate tax applies to estates worth at least $13.61 million. Based on taxable amounts, the tax can range from 18% to 40%. Thirteen states currently levy a state-level “death tax.” The generation-skipping transfer tax rate is 40%, but the exemption also equals $13.61 million, per the Tax Cuts and Jobs Act.
The bill has the support of House Ways and Means Chair Jason Smith (R-MO), who said repealing the death tax “is a necessary step to ensuring that family-owned farms and small businesses across America can continue to thrive and carry on their family’s legacy of hard work.”
No Capital Gains Allowance for American Adversaries Act. Introduced January 24 by Representative Brad Sherman (D-CA), investments in China, Russia, Belarus, and Iran would not qualify for lower capital gains tax rates.
Capital gains on stocks tied to the above countries would be taxed as ordinary income up to 37% as opposed to 15% to 20%. The bill would also eliminate the step-up basis for assets from these countries inherited at death.
“Lower tax rates for capital gains on stocks and other assets are designed to incentivize Americans to make investments that grow our economy,” said Sherman. “Yet investments made in companies abroad – even in nations undermining US national security interests – are still able to receive this tax incentive.”
BARECODE Efficiency Act. Introduced January 25 by Senators Tom Carper (D-DE) and Todd Young (R-IN), this bill would require returns prepared electronically and filed via paper to include a scannable 2-D barcode to quickly populate fields when processed.
The proposal essentially mandates a 2022 National Taxpayer Advocate Directive that instructed the IRS to implement barcode scanning and research similar technologies to reduce paper return backlogs at processing facilities.
“As government officials, we have a responsibility to be good stewards of taxpayer dollars. That includes ensuring that tax returns are processed accurately and in a timely manner,” said Carper. “I’m proud to introduce the BARCODE Efficiency Act because this bill implements commonsense technology that will increase the efficiency of the IRS and make a big difference for millions of American taxpayers.”
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