Here’s a look at recent tax-related happenings on the Hill, including President Joe Biden endorsing Vice President Kamala Harris in the presidential race and unveiling a rent cap plan for corporate landlords.
Lately on the Hill
President Biden Endorses VP Harris on His Way out of Presidential Race
After Biden announced the end of his candidacy for president on Sunday, he endorsed Harris as the Democratic Party nominee. As vice president, Harris has supported Biden’s tax agenda, although observing what her proposals were as a presidential candidate in 2020 may provide a preview of her forthcoming tax platform.
According to an article by the Tax Foundation published during the 2020 presidential race, Harris’ tax proposals at the time included an increase to the top marginal income tax rate to 39.6%, a 4% income-based premium on households earning more than $100,000 to pay for “Medicare for All,” new credits for low- and middle-income taxpayers, raising capital gains tax rates to be equal to ordinary income rates, increasing the corporate income tax rate from 21% to 35%, expansion of the estate tax to increase teacher pay, and the imposition of financial transaction taxes on trades of stocks, bonds, and derivative transactions.1
Biden Unveils Rent Cap Plan for Corporate Landlords
Biden is calling on Congress to rein in rising rents by offering legislative proposals “limiting rent increases and building more homes,” according to a Fact Sheet released by the White House.
The proposals include a choice given to “corporate landlords” with more than 50 units in their portfolio to cap annual rent increases at no more than 5% or forego accelerated depreciation on their assets. “Some corporate landlords have taken advantage of the shortage of available units by raising rents by more than increases in their own costs—resulting in huge profits at a time when millions of Americans are struggling to cover rent each month,” per the White House. The recommendation would make an exception for new construction and substantial renovation projects.
As the government is the largest landholder in the country, the president is directing all federal agencies to identify unused or underutilized land to make available for more affordable housing. The Bureau of Land Management (BLM); the U.S. Forest Service (USFS); the U.S. Postal Service; the Department of Housing and Urban Development (HUD), Health and Human Services (HHS); the General Services Administration (GSA); and the U.S. Department of Transportation are all announcing plans and actions to provide aid, such as the BLM’s planned sales of land below market value, workforce housing developments by the USFS, and new rulings from HHS and GSA to help developers use federal buildings and land to provide housing for the homeless.
HUD also is announcing $325 million in grants to “build new deeply-affordable homes, spur economic development, and revitalize neighborhoods in communities across the country,” according to the Fact Sheet.
A Look Into Republican VP Nominee J.D. Vance & His Recent Tax Proposals
The Republican vice-presidential nominee Sen. J.D. Vance (R-OH) has sponsored or cosponsored more than a dozen tax-related bills since he was sworn in to the Senate in January 2023, providing insight into his views and potential priorities if elected.
Most recently, he cosponsored a bipartisan bill with Sen. Sheldon Whitehouse (D-RI) titled the Stop Subsidizing Giant Mergers Act. The bill seeks to eliminate a tax deferral for shareholders who receive stock resulting from mergers, acquisitions, or transfers involving corporations with average annual gross receipts of more than $500 million. In a press release, Vance said, “It’s past time to close the unfair loopholes that allow these deals to escape tax liability. This commonsense, bipartisan legislation will ensure our nation’s largest corporations are held to a fair standard while preserving protections for small businesses to grow.”
Vance cosponsored the Safeguarding Charity Act along with Sen. Marco Rubio (R-FL) and other Republicans. The act excludes from the term “federal financial assistance” the exemption of federal income taxes to Section 501(c) and (d) tax-exempt organizations. The bill was in response to recent court decisions that deemed an organization’s tax-exempt status as a form of “federal financial assistance,” potentially subjecting these organizations (such as schools, churches, and charities) to federal regulations.
Vance also introduced a bill to increase the excise tax on net investment income of certain nonreligious private colleges and universities. The tax would increase from 1.4% to 35% for institutions with assets, other than those used in carrying out its exempt purpose, of $10 billion or more. In remarks to the Senate, he stated, “[university endowments] have grown incredibly large on the back of subsidies from the taxpayers, and they have made these universities completely independent of any political, financial or other pressure.”
From the Treasury & IRS
Final Regulations (T.D. 10001) have been set forth by the IRS relating to required minimum distributions from qualified plans; §403(b) annuity contracts, custodial accounts, and retirement income accounts; individual retirement accounts and annuities; and certain eligible deferred compensation plans. According to the IRS’ announcement in IR-2024-190, some changes were made; however, the final regulations generally follow the proposed regulations that were issued in 2022. Notably, the final regulations retained a controversial provision requiring a beneficiary of a plan to continue receiving annual payments if the required minimum distributions began before the original plan participant’s death. The required start date for plan distributions is now staggered depending on the age of the participant, ranging from 70 ½ years to 75 years. The final regulations are applicable as of January 1, 2025.
Final Regulations (T.D. 10004) have been released by the IRS regarding the treatment of property used to acquire parent stock or securities in connection with certain triangular reorganizations involving one or more foreign corporations under §367(b). The regulations intend to crack down on the exploitation of so-called “Killer B” triangular reorganizations under §368(a)(1)(B) designed to avoid taxes. These final regulations contain no substantive changes to the proposed regulations published in October 2023. The final regulations are effective as of July 17, 2024.
Proposed Regulations (REG-103529-23) have been set forth by the IRS providing guidance relating to required minimum distributions from qualified plans; §403(b) annuity contracts, custodial accounts, and retirement income accounts; individual retirement accounts and annuities; and eligible deferred compensation plans under §457. This notice of proposed rulemaking is made simultaneously with the release of the aforementioned final regulations (T.D. 10001), providing further amendments to provisions not addressed by the final regulations. A public hearing has been scheduled for September 25, 2024 at 10 a.m. ET.
Proposed Regulations (REG-119283-23) have been corrected by the IRS from their original publishing on June 3, 2024. The proposed regulations are in regard to the §45Y Clean Electricity Production Credit and the §48E Clean Electricity Investment Credit.
Proposed Regulations (REG-115710-22) gives notice from the IRS of a public hearing to be held on August 27, 2024 at 10 a.m. ET concerning the proposed guidance on the application of the new excise tax on repurchases of corporate stock made after December 31, 2022. Those wishing to speak must provide their outlines to the IRS by August 9, 2024.
Revenue Ruling 2024-15 has been issued providing the August 2024 various rates for federal income tax purposes, including the applicable federal rates (AFR), adjusted AFR, adjusted federal long-term rate, the long-term tax-exempt rate, percentages for determining the low-income housing credit, and the AFR for determining the present value of an annuity.
Notice 2024-59 has been released with guidance on the corporate bond monthly yield curve, spot segment rates, 24-month average segment rates, and the interest rate on 30-year Treasury securities.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.
- 1“Where Does Kamala Harris Stand on Tax Policy?” taxfoundation.org, August 12, 2020.