- Which of Biden’s economic reforms will have the biggest impact on Long Islanders?
- What you need to know and what you need to do
Biden has only been in the oval office for one week, but his plans to overhaul Trump administration tax codes have been well-established throughout his campaign. Now, the President looks to enact major changes, tax cuts, and benefits—some of which might have a strong effect on Long Island businesses, workers, and families.
Biden has been clear about his plan to raise the federal income tax rate for top earners. Long Island households earning over $400K per year might soon be looking at a 39.6% tax rate. Such high-income earners ($400K+) will also be disallowed from using the 20% business income deductibility on their personal returns (for small business owners and self-employed workers).
With hopes that taxing high-income earners will generate the revenue necessary to sustain the American economy for the long-run, Biden said: “If we invest now—boldly, smartly, and with an unwavering focus on American workers and families—we will strengthen our economy, reduce inequity, and put our nations long-term finances on a more sustainable course.”
Not everyone agrees. Long Island business owners are worried that such taxes are harming the very small business owners they are meant to protect. Elizabeth Wellington (founder of Wellie & Transporter LLC in Elmont, NY) said to Long Island Business News (LIBN): “Why should the people who are trying to make things happen, pay the price for those who are not making it happen?”
Also on the President’s to-do list: major reforms on the Tax Cuts and Jobs Act (TCJA) established by Trump. While Biden has not stated any explicit plans to repeal the TCJA, he has advocated provisions that would eliminate the current $10,000 cap on state and local tax (SALT). Eliminating the cap on SALT deductions would be a major win for middle-class Long Islanders who pay among the highest property tax rates in the nation. John A. Rizzo, the chief economist for the Long Island Association business group, said to LIBN that eliminating the SALT cap is exactly what Long Islanders need to re-stimulate the economy: “This translates into a lot more income for Long Islanders because you can deduct your entire property tax bill… That would certainly stimulate consumption.”
Among other significant expenses, Biden’s new deal includes a $1.3 trillion budget for national infrastructure. The price tag is high, but Long Islanders can look forward to the construction of five new windfarms around the island—near Jones Beach and Montauk Point—to provide sustainable energy to both Nassau and Suffolk counties.
While most of these provisions have not been set in stone yet (though we can expect they will be in the near future), one thing remains certain: many changes are on the way. Thoughts? Call us at 516-541-6549 or visit our website for more information.
Associate, Creative Solutions
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