The Biden administration’s FY 2024 budget proposes a series of tax hikes that would push both individual and corporate rates to the highest levels among developed economies. According to analysis from the Tax Foundation, the plan could raise federal revenue while also shrinking the economy and eliminating jobs.
Proposed tax increases
- Individual income taxes – New brackets target high‑income earners, including millionaires and billionaires. The administration frames the changes as a “wealth tax,” but the legislation would raise marginal rates on ordinary income.
- Corporate income tax – The corporate rate would rise from the current 21 % to 28 %, a 7‑percentage‑point increase that the Treasury estimates could generate an additional $1.3 trillion over ten years.
- Unrealized capital gains – A novel provision would tax unrealized gains of high‑net‑worth individuals, effectively extending the tax base to wealth that has not been sold.
Projected fiscal and macroeconomic effects
| Metric | Estimate (Tax Foundation) |
|---|---|
| Deficit impact of the Build Back Better Act (if enacted) | +$800 billion over the next decade |
| Additional revenue from corporate‑rate hike | $954 billion over ten years |
| Long‑run GDP impact | −0.5 % to −0.7 % |
| Job impact | Loss of 125 000 to 145 000 jobs |
The analysis notes that the budget assumes the Build Back Better legislation will be “deficit‑neutral,” a claim contradicted by Congressional Budget Office projections.
Implications for high‑net‑worth individuals and entrepreneurs
- Effective tax burden – Combining higher marginal rates with the unrealized‑gains tax could place U.S. high earners among the most heavily taxed globally.
- Compliance burden – Wealthy taxpayers already face complex filing requirements; additional rates increase both cash outlays and administrative effort.
- Business valuation risk – Taxing unrealized gains could penalize companies whose market value fluctuates, potentially discouraging reinvestment or expansion.
International relocation considerations
Given the projected tax environment, many entrepreneurs explore moving assets or operations abroad. Common strategies include:
- Establishing residence in low‑tax jurisdictions – Countries such as Puerto Rico, Panama, Malaysia (Penang), and others offer favorable tax regimes for expatriates and businesses.
- Obtaining a second passport – Dual citizenship can provide flexibility for personal and corporate tax planning.
- Shifting business operations – Relocating production, sales, or intellectual‑property functions to jurisdictions with lower corporate rates and fewer regulatory hurdles.
These options can reduce overall tax exposure, lower compliance costs, and mitigate the risk of future U.S. policy shifts that target high‑income individuals and profitable enterprises.
