Biden Aides Quietly Say His Tax Increases Would Help Charities

WASHINGTON — President Biden’s plan to raise taxes on high earners and the wealthy is likely to entice more rich Americans to give prope...

WASHINGTON — President Biden’s plan to raise taxes on high earners and the wealthy is likely to entice more rich Americans to give property or other assets to charity before they die in order to avoid large tax bills, a top administration official told nonprofit leaders last week in a private conference call.

On the call, a deputy director of Mr. Biden’s National Economic Council, David Kamin, was asked how the president’s tax plans would affect charitable giving — in particular, his proposals to change the tax treatment of the capital gains income that high earners receive from selling assets that have gained value, like businesses or stocks.

The plan “actually increases the incentive to give to charity,” Mr. Kamin told the group. “And it basically says if you want to not pay tax on the gain, the way you need to do that is to give the property to charity.”

Mr. Kamin further explained the administration’s rationale, saying “at that point it’s obviously with a charitable organization.”

“We think it’s appropriate that no tax is paid at that point,” he continued. “But if you choose to give it to your heirs or you choose to use it for yourself, then you should be paying tax on those very large amounts of gains.”

The comments were an acknowledgment that Mr. Biden’s proposals would encourage the wealthy to find new workarounds to reduce the amount of tax they or their heirs pay, particularly on assets that appreciate over time, even as the president seeks to level the tax playing field between typical workers and the very rich.

Mr. Biden could have limited that workaround by proposing a cap on itemized deductions for high earners, as he did in the campaign, but such a plan was not included in his $4 trillion economic agenda introduced this spring.

White House officials say they have accounted for the potential increase in charitable giving in their internal estimates of how much revenue Mr. Biden’s plans will raise. Those proposals include raising the top marginal income tax rate to 39.6 percent from 37 percent, subjecting more income to a 3.8 percent tax that helps to fund the Affordable Care Act and a variety of efforts to raise more from high-income people who earn money from their investments.

Officials have not detailed their estimates of how much money Mr. Biden’s capital gains tax changes will bring in, though Mr. Kamin was a co-author of a study in 2019 that estimated a less ambitious version of the proposal would raise nearly $300 billion over a decade.

The president has not promoted incentives for giving as he attempts to sell his tax proposals, which include $80 billion for enhanced enforcement efforts at the International Revenue Service to help capture revenue from high earners and corporations who evade taxes illegally — as opposed to take advantage of legal avenues to reduce them, like charitable giving.

Mr. Biden has instead leaned into his case that high earners can and should pay more to the government.

“We’re not going to deprive any of these executives of their second or third home, travel privately by jet,” he said this week. “It’s not going to affect their standard of living at all. Not a little tiny bit. But I can affect the standard of living that people I grew up with.”

Administration officials say Mr. Biden proposed the suite of tax increases he judged best to help fund his economic ambitions this year, which include a sprawling proposal to invest in and update both physical infrastructure and what officials call “human infrastructure.”

To help fund his $1.8 trillion plan for education, child care and expanded tax credits, Mr. Biden has proposed what would be a near-doubling of the capital gains rate for people earning more than $1 million a year. He would also eliminate a provision in the tax code that reduces the tax bill on assets that have gained value over time and been passed on to heirs at death as part of a large estate.

Such moves would reduce the amount of money that high earners and the wealthy have on hand to donate to charity. But they would increase the value of donations, because they would more rapidly reduce a high-earning donor’s tax liabilities.

“The proposal reflects a judgment that the fair thing to do is that we should change the way the very rich get treated when it comes to their large gains, which have too often gone untaxed,” Mr. Kamin said in an interview.

“There’s a difference between giving an asset to charity, and using it for yourself or giving it or using it for your heirs, and that’s what’s reflected in the proposal.”

Many economists and tax experts agree the net effect of the plans would be an increased incentive to donate.

“When I heard about this proposal, the potential opportunity for avoidance through charitable giving was the first thing that came to my mind,” said Garrett Watson, a senior policy analyst at the Tax Foundation, a think tank in Washington that tends to extol the benefits of lower taxes. “Higher tax rates mean the deductibility with respect to charitable giving is more valuable.”

Efforts to overhaul the tax code are often met with cheers or resistance among nonprofit organizations that rely heavily on tax-deductible donations. Such groups watched Mr. Biden closely through the presidential campaign, as he introduced plans to raise taxes on businesses and on people earning more than $400,000 a year. Mr. Biden’s plans would also have capped the value of itemized deductions at 28 percent for high earners, which would have reduced the tax benefits of giving to charity for many heavyweight donors.

Duke University published an online guide to Mr. Biden’s tax plans for its donors in November, noting that donating stocks and other assets that have gained value “to a public charity — like Duke — can have two powerful tax benefits.” The president’s proposed increase in the capital gains rate for high earners, it wrote, “would mean that significantly more tax could be avoided through a charitable gift, greatly incentivizing gifts of these appreciated investments.”

Patrick M. Rooney, an economist who is the executive associate dean for academic programs at the Indiana University Lilly Family School of Philanthropy, said Mr. Biden’s increases could also create a psychological incentive of sorts for people who were under pressure to pass assets on to their heirs, but instead want to donate them.

“It kind of gives you an out with the kids and the grandkids,” he said. “‘I’m not going to give it to you, because so much will be taken out in taxes — and you can help me decide who to give it to.’”

Source Link



Africa,819,Americas,4123,Art & Culture,14956,Arts,6503,Arts & Design,1672,Asia,3282,Automobile,463,Baseball,632,Basketball,527,Books,3897,Business,5347,Celebrity,2633,Cricket,648,Crime,158,Cryptocurrency,1577,Dance,669,Defense,836,Diplomatic Relations,2496,Economy,1150,Editorial,260,Education,1255,Elections,308,Energy & Environment,3076,Entertainment,22716,Environment,3620,Europe,4230,Faith & Religion,235,Family & Life,817,Fashion & Style,3266,Finance,19996,Food & Drink,3752,Football,1111,Games,97,Gossip,10289,Health & Fitness,4095,Health Care,937,Hockey,227,Home & Garden,920,Humour,994,Latin America,49,Lifestyle,17099,Media,527,Middle East,1532,Movies,1730,Music,2657,Opinion,3077,Other,11948,Other Sports,5051,Political News,11324,Political Protests,2324,Politics,17720,Real Estate,1864,Relationship,106,Retail,3116,Science,2636,Science & Tech,10045,Soccer,238,Space & Cosmos,347,Sports,12257,Technology,3442,Tennis,578,Theater,1685,Transportation,313,Travel,2572,TV,3688,US,243,US Sports,1481,Video News,3531,War & Conflict,1069,Weird News,998,World,16517,
Newsrust - US Top News: Biden Aides Quietly Say His Tax Increases Would Help Charities
Biden Aides Quietly Say His Tax Increases Would Help Charities
Newsrust - US Top News
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy Table of Content