President Proposes Higher Taxes on Billionaires, Corporations by Joseph C. Leuchter, CPA

Posted on April 20, 2022 by Joseph Leuchter

The Biden administration recently released its fiscal budget for 2023, which an accompanying fact sheet claims will help lower costs for American families, expand the productive capacity of the American economy and further reduce the deficit. To raise the revenue required to accomplish these goals, the budget proposes to modify existing business and international tax laws, close certain tax loopholes and impose higher taxes on high-net-worth individuals. Following is a broad overview of the provisions contained in the 2023 fiscal budget. Whether or not they will receive legislative approval remains to be seen.

Individual Taxes

One of the more newsworthy measures included in the administration’s revenue proposal is a “Billionaire’s Minimum Income Tax” that would apply the top 0.01 percent of all taxpayers. Under this provision, households with a net worth of more than $100 million would be required to pay a 20 percent federal tax on their full income, defined as taxable earnings and both realized and unrealized gain, the latter of which are currently not taxable. A second level of tax would not be applied when taxpayers recognize a gain (or loss) from the sale or disposal of an appreciated (or depreciated) asset if already taxed under this new regime.

The budget also proposed to change the tax treatment of long-term capital gains and qualified dividends recognized by taxpayers with taxable income of more than $1 million from a top capital gain rate of 20 percent (plus 3.8 percent net investment income (NIIT)) to an ordinary income tax rate that currently tops out at 37 percent plus the 3.8 percent NIIT.  This too could change under the administration’s fiscal budget, which also calls for the top marginal income tax rate to increase to 39.6 percent after Dec. 31, 2022.

Estate Planning

The budget calls for treating transfers of appreciated property by gift or on death as realization events that would be subject to capital gains tax at the time of transfer. This provision would eliminate the benefit heirs currently receive of a step-up in an asset’s tax basis to the fair market value on the date of the original owner’s death.

The administration also proposes to modify the gift and estate tax treatment of certain trusts, including grantor retained annuity trust (GRAT), for which grantors would be prohibited from acquiring or exchanging an asset held in the trust without recognizing a gain or loss for income tax purposes. Another provision calls for limiting the use of donor-advised funds to avoid payout requirements of private foundations.


The 2023 fiscal budget proposes to increase the corporate tax rates from 21 percent to 28 percent and change the definition of “control” for determining whether a corporation is a member of an “affiliated group” of corporations for tax reporting purposes. Specific to real estate businesses, the proposal calls for eliminating the benefit of tax deferral on gains from 1031 like-kind exchanges of real property and imposing ordinary income tax rates on carried interest rather than the lower capital gains rate of 20 percent. There is also a provision calling for an increase in recapture of depreciation deductions as ordinary income for certain depreciable real property.


Among the provisions relating to international business are proposals to repeal the base erosion and anti-abuse tax (BEAT) in favor of an undertaxed profits rule, to eliminate tax deductions for transferring jobs overseas, expand the definition of foreign business entity to include taxable units and modify the passive foreign investment company (PFIC) rules to expand access to retroactive qualified electing fund elections.

It is likely Congress will spend the next few months debating, negotiating and red lining the budget in its proposed form. During this time, it behooves taxpayers to assess their current business structures and estate plans to ensure they have the strategies in place to minimize exposure to any potentially negative tax implications.

About the Author: Joseph C. Leuchter, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where he helps individuals and businesses grow wealth and profits while maintaining tax efficiency and compliance. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or at