While negotiations in Washington, D.C. continue over tax rates, it looks increasingly unlikely Senate Democrats will have the votes to raise the C-Corporation rate from 21% to at least 25%, as planned. On the table is a resurgent discussion over a 15% corporate minimum tax to limit deductions to create a base effective tax rate. Objections from a Senator that Democrats cannot afford to lose has given outsized influence to a single member of Congress. Also likely off the table is the elimination of step-up basis for capital gains and raising taxes on business owners reporting under $500,000.
A possible outcome under discussion is to create a yearly tax on unrealized gains from publicly traded assets by the highest of earners (three straight years of $100 million in earnings or $1 billion in wealth). The final treatment of pass-throughs is also uncertain, but businesses are in a much better position today than just a week ago due to the support of moderate Democrats on Capitol Hill. President Biden wants a deal in hand by October 29, with negotiations intensifying in these final days to reach that deadline.