In our first tax plan comparison we discussed Individual tax provisions and a few specific tax items. In session #2 we went over carried interest, changes to social security taxes and California’s AB5. In session # 3 we went over health care and retirement. Now, let’s take a look at some business provisions.
Under current law we have a flat 21% corporate tax rate. Trump’s plan does not change this. The Biden plan would raise that rate to 28%. In addition, for large corporations reporting over $100 million in book profits and paying no tax they would be subject to a minimum tax at 15%.
We currently do not have a nationwide carbon tax. Trump’s previous proposals backed carbon capture efforts but not a tax. Biden supports a carbon tax.
The Biden plan would increase work opportunity tax credits for employers to include military spouses. Biden would also create a new childcare construction tax credit for 50% of the cost of building a new childcare facility up to $500,000.
For depreciation, we currently have accelerated methods and immediate expensing available for businesses and corporations, depending on the type of asset purchased. The Trump plan would not change this. The Biden plan would reverse much of these provisions as they apply to corporations.
The Trump plan supports existing tax structure for fossil fuels, including deductions for depletion allowances and intangible drilling costs. The Biden plan would end these tax incentives for fossil fuels.
Current law allows for a 20% qualified business deduction for businesses other than C Corporations. The Trump proposal would not change this. The Biden proposal would end this deduction for taxpayers making over $400,000 and disallow the deduction for certain businesses including real estate investors.
Biden’s plan would also create a tax credit for businesses that renovate or revitalize existing or closed plants and facilities, and also increase tax credits for employers who hire disabled workers or improve accessibility of work sites.
Coming up in our next discussion – real estate provisions and energy credits.