Budget Proposals - Biden Administration
There are budget proposals currently, under the Biden administration, that are yet to be passed in Congress and in the house. These are prospective changes that may or may not be passed, but it might be important to know what you could expect. Here is a summary of proposed tax changes:
1. Capital gains tax will be raised from 20% to 39.6% (the highest since 1978)
2. Top tax rate will be raised from 37% to 39.6% (blocked income might not be a way to go) for residents of India.
3. Corporate tax rate will be raised from 21% to 28%
4. Net investment income tax will be raised from 3.8% to 5.0%
Other changes in the wings
1. Elimination of tax break for crypto investors
2. Elimination of carried-interest tax break
3. Increase stock buyback tax from 1% to 4%
While these proposals may not necessarily be passed in their current wording, we are of the opinion that tax rates will go up in the future to pay for all the Covid incentives. In light of some of the tax increases, if anyone is going down the path of blocked income reporting in the US (because India does not allow you to take out more than a certain currency amount), be aware that while you can defer taxes in the US, you are exposing yourself to potential increases in tax rates.