Election 2020: Joe Biden's Tax Proposal

Joe Biden, the Democratic nominee for President, has laid out an ambitious tax plan that he hopes to implement should he be elected in November. According to the Tax Foundation, Biden hopes to increase payroll taxes as well as long-term capital gains taxes, eliminate the step-up basis, increase corporate taxes, and potentially do away with 1031 exchanges.

The potential elimination of 1031 exchanges for investors with annual incomes over $400,000 has caught the attention of real estate experts nationwide. Biden hopes to use the money generated by this proposal to finance childcare and eldercare initiatives. Past attempts to eliminate 1031 exchanges have been unpopular with lawmakers, however, and if elected president Biden would need the support of Congress to implement this change. In addition, Biden plans to tax long-term capital gains at the standard income tax rate of 39.6% for those earning over $1 million annually and eliminate the step-up basis. 

Biden’s plan also includes an increase in corporate taxes to 28% and imposing a 15% minimum tax on book income for companies with at least $100 million in annual net income. He also hopes to tax the profits of foreign subsidiaries of US firms at a rate of 21% and raise the tax on the top income bracket to 39.6%.

Researchers at the Wharton School estimate that Biden’s tax plan would raise $2.6 trillion. While individuals in the top 0.1% of earners would see a 3.2% increase in their share of federal taxes and the rest of the top 1% would see a .2% increase, all other income groups would see their share of federal taxes either stay the same or go down slightly.

In addition to his tax plan, Biden’s housing proposals also include changes to the tax code. Biden hopes to implement a renter’s tax credit to approve housing affordability. He also hopes to expand housing assistance for community workers and fully fund rental assistance programs, including Section 8. Biden supports the Legal Assistance to Prevent Evictions Act of 2020, which would give tenants access to legal assistance for eviction proceedings. Biden has also come out against local exclusionary zoning policies.