When the $1.75 trillion Build Back Better (BBB) Act becomes a law, it is expected to bring in several tax reforms as well.
The Senate is likely to make some revisions to it before reaching President Biden’s desk again.
Let’s take a look at how the proposed tax changes in the BBB plan will affect taxpayers.
The major impact is likely for very wealthy Americans. The people who earn at least $10 million a year will have to pay 37% tax on adjusted gross income now. According to the provisions in the BBB, there would be a surtax of 5%. Besides, people who make more than $25 million will have to pay an additional 3% tax.
It is expected that a minimum of $230 billion could be raised by the surtax over the next decade. The highest earners in the country will have to pay more in taxes in future.
Some experts pointed out that if a person has an AGI of $25 million or more, he is likely to pay a tax of 50%.
But some experts are of the view that the new tax reforms have provisions to avoid double taxation.
However, there is criticism that it would eventually serve as a tax cut for the wealthy. Senate might make some changes in this regard, reports said.
As per the provisions, companies will have to pay a minimum tax of 15% if they have more than $1 billion in annual profits to their shareholders for three consecutive years.
Large companies with international operations will have to pay a tax rate of 15% for their foreign earnings. The current rate for such companies is 10.5%. This is likely to affect around 200 American firms, according to lawmakers.
Under the BBB, the enhanced child tax credit would be extended for an additional year, through 2022, reports added.