Making Sense of the Recent Tax Chatter

By Matthew R. Hilbert, CPA - Director of Tax


Now that the Biden administration has passed its signature legislation, the American Rescue Plan Act (ARPA), attention is now focused on future legislation, including tax hikes. While there is no current proposal package, a review of the Biden tax plan published during the campaign is a good place to start.

President Biden has promised not to raise taxes on people making under $400,000 annually and is committed to ensuring that the wealthy and corporations pay their “fair share”. The focus is on the Ultra High Net Worth community. The following chart lists some of the more significant tax proposals that would impact UHNW families and the projected 10-year revenue.




Current Legislation Proposed

Revenue Impact over 10-Year Period 

Increase top rate from 37% to 39.6% for taxpayers making more than $400,000.

H.R. 946 was introduced February 8, 2021 by Rep. Pascrell (D-NJ).

$148 billion - See Note (1)

Remove social security taxable wage base cap on earnings more than $400,000.


$820 billion

Tax capital gains and dividends at 39.6% on income greater than $1 million and repeal step-up in basis.


$469 billion

Cap itemized deductions at 28% of adjusted gross income; eliminate SALT dollar limitation.

Several bills have been introduced in House and Senate to repeal the SALT  limit. Was not included in ARPA.

$284 billion

Limit qualified business income (QBI) deduction to taxpayers making less than $400,000.


$177 billion - See Note (1)




Current Legislation Proposed

Revenue Impact over 10-Year Period

Reduce gift and estate tax exemption to 2009 levels from $11,700,000 to $3,500,000 and top tax rate from 40% to 45%.

S. 617 was introduced March 9, 2021 by Sen. Thune (R-SD) to repeal the estate and generation-skipping taxes.

$281 billion - See Note (2)

Wealth Tax – President Biden has previously stated he did not generally support a wealth tax. The recent proposal would impose a 2% annual tax on net worth of households and trusts valued over $50 million with a surtax of 1% for values greater than $1 billion.

S. 510 was introduced March 1, 2021 by Sen. Warren (D-MA).

Not scored as it was not part of the Biden Plan.



Current Legislation Proposed

Revenue Impact over 10-Year Period

Raise the corporate tax rate from 21% to 28%.


$1,051 billion

Add a minimum tax of 15% on companies reporting book income of more than $100 million.


$203 billion

Double the tax rate on global intangible low-taxed income (GILTI) from 10.5% to 21%.


$290 billion

Note (1) – Tax savings as part of the 2017 Tax Cut and Jobs Act (TCJA) will expire 12/31/2025 without any legislation.
Note (2) – TCJA provision will expire 12/31/2025 and revert to 2017 level: $5,490,000 adjusted for inflation and $40%.
© The Bureau of National Affairs; 2020 & Tax Foundation; October 22, 2020.

Planning Opportunities

Most pundits believe that any tax increases would not be effective until 2022 as there is a reluctance to pass tax increases during an economic recovery. That also makes it highly unlikely that any tax increases would be retroactive to the beginning of 2021. The window of opportunity appears to be in 2021.

Accelerate Deferred Compensation or other ordinary income

  • Taxation will be at 37% rather than at 39.6%.
  • For earned income, no additional social security tax, which combined with employer match (or self-employment tax) equals 12.4%.

Accelerate Charitable Giving to offset ordinary income and mitigate the impact of the proposed 28% tax benefit limitation on itemized deductions

  • The limit on qualified cash charitable contributions has been suspended for 2021 and may equal 100% of taxpayers adjusted gross income (AGI).
  • To maximize charitable contributions in 2021:
        - First 30% of AGI - Contribute appreciated securities to a public charity, including donor-advised funds.
        - Next 30% of AGI - Contribute cash to a public charity, including donor-advised funds.
  • Balance up to 100% of AGI – Contribute cash contributions to a public charity that is not a donor-advised fund.
  • Pre-funding many years of charitable contributions, taxpayers can lock in the tax benefit at 37%, which may also reduce state tax liabilities.
  • Use charitable deductions to offset ordinary income as the tax savings are significantly greater than offsetting capital gain income.

Recognize capital gains

  • Savings can be up to 19.6%.
  • Particularly useful if gain recognition is imminent or on the horizon, like the sale of a business.
  • Is there a timing issue? Sell closely held enterprise to descendants’ trust. Lock in a 20% gain rate and achieve an estate tax freeze on future appreciation.
  • The capital gains recognition can raise the amount of AGI, allowing more charitable contribution from appreciated securities and donation to donor-advised funds to offset ordinary income.

Take full advantage of the current gift and estate tax exemption

  • Increased to $11,700,000 in 2021 from $11,580,000.

Monitoring Legislation

The Pitcairn team will continue to monitor and inform you of any new and proposed legislation. As always, we recommend contacting your tax preparer regarding your specific situation. 


About Pitcairn

Pitcairn is a true family office and leader in helping families navigate the challenges and opportunities created by the interplay of family and financial dynamics. Through Wealth Momentum®, an experience-based family office model, Pitcairn helps families achieve a more effective and complete experience. Since its inception, Pitcairn has partnered with some of the world’s wealthiest families to meet their needs and drive better outcomes – year to year, decade to decade, generation to generation. Today, Pitcairn is recognized as an innovator, guiding families through generational transitions and redefining the industry standard for family offices. The firm is located in Philadelphia, with offices in New York and Washington, DC and a network of resources around the world.