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Submitted by Schmersahl Treloar

President Biden has released his proposed budget for the federal government for the 2024 fiscal year. The budget, which aims to cut the deficit by nearly $3 trillion over 10 years, includes numerous provisions that would affect the tax bills of both individuals and businesses. While most of these proposals stand little chance of enactment with a Republican majority in the U.S. House of Representatives, they shed light on the Democrats’ priorities as they prepare for the 2024 election season.

Individual tax provisions
The proposed budget includes tax provisions that would affect taxpayers of various income levels. In particular, it would make the following changes:

Tax rates. The proposal would reinstate the top individual tax rate of 39.6% for single filers earning more than $400,000 ($450,000 for married couples).

Net investment income tax (NIIT). The NIIT on income over $400,000 would include all pass-through business income not otherwise covered by the NIIT or self-employment taxes. The budget also would increase both the additional Medicare tax rate and the NIIT rate by 1.2 percentage points. Thus, the Medicare tax rate would be 5% for earnings above $400,000, and the NIIT rate would be 5% for investment income above $400,000.

Capital gains tax. The highest capital gains rate now is 20% (or 23.8% if the NIIT applies). For individuals with taxable income of more than $1 million, the budget proposes that capital gains be taxed at ordinary rates, with 37% (or 40.8% with the NIIT) generally being the highest rate — or 39.6% (or 43.4% with the NIIT) if the top tax rate is raised.
Child tax credit (CTC). This proposal would expand the CTC and make it fully refundable and payable in advance on a monthly basis. For eligible parents, the credit would increase from $2,000 to $3,000 for children age six and older and $3,600 for children under age six.

The proposal also would establish a “presumptive eligibility” for determining when a taxpayer is eligible to claim a monthly specified child allowance or receive a monthly advance child payment. After a taxpayer establishes presumptive eligibility for a child, that child would be treated as a specified child of the taxpayer for each month during the period of the taxpayer’s presumptive eligibility.

Premium tax credits (PTCs). The American Rescue Plan Act expanded eligibility for healthcare insurance subsidies to taxpayers with household incomes above 400% of the federal poverty line for 2021 and 2022. It also reduced the applicable contribution percentage (the percentage of household income a taxpayer must contribute toward a healthcare insurance premium). The Inflation Reduction Act (IRA) extended the expansion through 2025. The proposed budget would make this expansion permanent.

Cryptocurrency taxation. The proposal would amend the “wash-sale” rule to cover digital assets. The rule prohibits the deduction of a loss when the taxpayer acquires “substantially identical” investments within 30 days before or after the sale date.

Minimum wealth tax. The proposal would impose a minimum 25% tax on total income, generally inclusive of unrealized capital gains, for all taxpayers whose assets exceed liabilities by more than $100 million. According to the White House, the tax would apply to only the top 0.01% of taxpayers.

Gift and estate taxes. The proposal would close loopholes related to certain trust arrangements. Specifically, the changes would affect grantor-retained annuity trusts and charitable lead annuity trusts.

Business tax provisions
The proposed budget’s tax provisions target numerous issues of interest to businesses, including:
Corporate tax rates. The proposal would trim back the large cut made to the corporate tax rate in the Tax Cuts and Jobs Act (TCJA). It would hike the tax rate for C corporations from 21% to 28% — still significantly less than the pre-TCJA rate of 35%. In addition, the effective global intangible low-taxed income (GILTI) rate would increase to 14%. Overall, with other proposed changes, the effective GILTI rate would rise to 21%.

Global minimum tax. The proposal would repeal Base Erosion and Anti-Abuse Tax (BEAT) liability, replacing it with an “undertaxed profits rule.” In conjunction with the GILTI regime, the rule would ensure that income earned by a multinational company, whether parented in the United States or elsewhere, is subject to a minimum rate of taxation regardless of where the income is earned.

Stock buyback excise tax. The IRA created a 1% excise tax on the fair market value when corporations buy back their stock, with the goal of reducing the difference in the tax treatment of buybacks and dividends. The proposal would quadruple the tax to 4%.

Carried interest loophole. A “carried interest” is a hedge fund manager’s contractual right to a share of a partnership’s profits. Currently, it’s taxable at the capital gains rate if certain conditions are satisfied. The budget proposes to close this loophole.

Like-kind exchanges. Owners of certain appreciated real property can defer the taxable gain on the exchange of the property for real property of a “like-kind.” The proposal would allow the deferral of gain up to an aggregate amount of $500,000 for each taxpayer ($1 million for married couples filing a joint return) each year for like-kind exchanges. Under this proposal, any like-kind gains in excess of $500,000 (or $1 million for married couples) in a year would be recognized in the year the taxpayer transfers the real property.

Low-income housing tax credit. The budget proposes to expand and enhance the largest federal incentive for affordable housing construction and rehabilitation.

The elephant in the room
The budget proposal doesn’t address many of the temporary tax provisions of the TCJA that have expired or are set to expire in the next few years. The increased standard deduction, reduced individual tax rates, qualified business income deduction for pass-through businesses, and limit on the state and local tax deduction are among the numerous provisions scheduled to expire at the end of 2025 — potentially affecting the tax liability of a wide swath of taxpayers. We’ll keep you informed if there’s significant movement on this front.

Call us at 314-966-2727 with any questions. https://www.stcpa.com/

A very special home is emerging in Dardenne Prairie in O’Fallon, Mo., and once again, the IBEW/NECA Electrical Connection is donating resources to build it.  When completed later this year, the sale of the 14^th St. Jude Dream Home in St. Louis will benefit children served by the renowned St. Jude Children’s Research Hospital.  The Electrical Connection is a partnership of the International Brotherhood of Electrical Workers (IBEW) Local 1 and the St. Louis Chapter of the National Electrical Contractors Association.  It is donating all electrical services to build the 2,711-square-foot, two-story home, which carries an estimated value of $711,000. The home is being built by Fischer Homes.  NECA contractor Grasser Electric and IBEW Local 1are performing the electrical work.

In June of this year, a total of 16,000 tickets will be available for a chance to win the home and other prizes at $100 each.  Last year, tickets to win the home sold out in 10 days. The drawing to give away the home will be carried live on FOX 2 on August 17, 2023.  For more information, visit www.stjude.org/give/dream-home/st-louis.html.

Located at 209 Kerry Downs Drive, the groundbreaking for this year’s St. Jude Dream Home was held on Feb. 10, 2023. The Grasser Electric/IBEW 1 team are currently roughing in electrical infrastructure.

“This year’s St. Louis Dream Home would not be possible without our incredible trade partners and vendors like IBEW Local 1/ Grasser Electric,” said Carrie Rogiers, marketing manager at Fischer Homes. “We are grateful for their support of the lifesaving research being done at St. Jude Children’s Research Hospital.”

The home features four bedrooms and two and a half baths; a spacious owner’s suite and bathroom; 17-foot ceilings in the family room with open concept living; a gourmet kitchen with an expansive island; a private study with French doors; flexible main-floor space for a casual living room, dining room, recreation room or an extra study space; a convenient second-floor laundry room; a three-car garage.  It also includes all of the Inverness subdivision amenities, including lakes, parks, open green space and walking trails.  It is located next to the Lake Forest County Club. 

“Our membership is inspired to serve this very worthy cause,” said Frank Jacobs, IBEW business manager.  “Countless families have relied on St. Jude’s critical research and treatment of childhood cancer and other life-threatening diseases.”

The home is built with the generosity and support of sponsors, trade partners, and the local community. Every dollar raised goes straight to St. Jude Children’s Research Hospital for funding research and providing care. 

“Our NECA contractors, like Grasser, excel at proficiently installing home electrical infrastructure and fixtures while ensuring everything is built to code,” noted Kyle McKenna, Executive Vice Presidentof St. Louis NECA.

St. Jude Children’s Research Hospital is leading the way the world understands, treats and defeats childhood cancer and other life-threatening diseases. It is the only National Cancer Institute-designated Comprehensive Cancer Center devoted solely to children. Treatments invented at St. Jude have helped push the overall childhood cancer survival rate from 20 percent to 80 percent since the hospital opened more than 50 years ago. St. Jude is working to drive the overall survival rate for childhood cancer to 90 percent, and we won’t stop until no child dies from cancer. St. Jude freely shares the discoveries it makes, and every child saved at St. Jude means doctors and scientists worldwide can use that knowledge to save thousands more children. Families never receive a bill from St. Jude for treatment, travel, housing or food – because all a family should worry about is helping their child live. Join the St. Jude mission by visiting stjude.org, liking St. Jude on Facebook (facebook.com/stjude) and following us on Twitter (@stjude).

The Electrical Connection IBEW/NECA partnership represents more than 5,000 highly skilled and safe IBEW Local 1 electricians and the more than 150 electrical contractors who employ them.  For more than 80 years, the partnership has trained more electricians/communication technicians than any education program in Missouri. Its award-winning work provides safe and reliable electrical construction, maintenance, repair and replacement services across Missouri, the nation and the world. Learn more at www.electricalconnection.org.

Founded in 1980, Fischer Homes has grown to build over 36,000 homes and employs 700 associates. Recognized as the 30^th largest builder in the U.S., the company now has more than 200 new home communities throughout Ohio, Kentucky, Indiana, Georgia, and Missouri. Their beautifully designed homes offer choices for people in all stages of life and range in price from the $200s to over $1 million. If you would like to learn more about new Fischer Homes communities in the St. Louis area, please call or text 314-310-2188 or visit fischerhomes.com.

* Fischer Homes is not affiliated with Fischer & Frichtel Homes of St. Louis, Missouri.

The American Society of Concrete Contractors (ASCC) Education, Research & Development Foundation has announced the launch of a website dedicated to the construction industry’s transformation from hard-hats-to-helmets (H2H). Over the past few years many companies have made the H2H switch, and the new website is aimed at bringing further awareness to this life-saving topic.

ASCC’s Safety & Risk Management Council (SRMC) is a group dedicated to addressing safety performance and reducing job-related hazards and making sure ASCC contractors are the safest in the industry. The SRMC focuses on the most relevant topics to provide industry leadership, and the H2H initiative was borne out of the desire to reduce the frequency and severity of head injuries in the construction industry.

ASCC developed this website to provide a one-stop-shop for information related to features, benefits and current and emerging technologies of impact and energy absorbing construction helmets. Structural Technologies, LLC, an ASCC Sustaining Member company, provided support to build the site.

Peter Emmons from Structural Technologies stated, “we are pleased to work with ASCC and other industry partner organizations to support this website which will help get the message out.” He went on to add, “and that message is simple – the construction industry can reduce the number of head injuries and fatalities today by saying no to continuing to use 60-year-old hard hat designs and yes to helmets that deliver the best technology available for head protection.”

Extensively tested and approved throughout the world, construction helmets, like helmets used for activities such as biking, skiing, and others provide protection from head injuries due to falls as well as impact and penetration resistance to all areas of the head. H2H, with support from industry organizations and partners, will continue to share a message that will lead to the reduction of traumatic brain injuries and deaths in the construction industry. The H2H website provides information regarding regulatory requirements, research and development, the evolution of the hard hat to the helmet, helmet success stories, and detailed product information from helmet manufacturers.

Founded in 1964 and headquartered in St. Louis, Mo., the American Society of Concrete Contractors (ASCC) is a non-profit association developed by concrete contractors for concrete contractors to provide a unified voice for the industry. Since its beginnings, the ASCC has grown to represent approximately 730 companies worldwide, providing unmatched support for industry knowledge, best practices and recognition. Members of the ASCC represent concrete and general contracting firms, manufacturers, suppliers, designers and other concrete industry professionals both in the field and in the office. This powerful organization remains committed to helping concrete contractors improve their businesses and their roles as contractors by providing the tools to grow business and provide the highest quality product.

STRUCTURAL TECHNOLOGIES is firmly committed to its mission of making structures stronger and last longer. We develop and integrate products, engineering support, repair and maintenance services to provide value-added solutions to owners, engineers and contractors. STRUCTURAL TECHNOLOGIES provides state-of-the-art proprietary products and engineering support and delivers repair & maintenance services through our construction licensees.