Presidential nominee Joe Biden has been a bit more visible recently as he begins to lay out his economic plan for the country. In addition to creating more high-paying union jobs, which he claims is consistent with private industry and a market-based economy, he also wants to move the U.S. to a carbon-neutral stance by 2035 and rid the nation of fossil-fuel-powered cars.
Biden announced a $775 billion plan to provide universal daycare for 3-year-olds and 4-year-olds, and to eliminate the wait time for elderly care while also increasing the pay for educators and caregivers. To pay for it all, Biden plans to tax real estate investors by eliminating 1035 exchanges, which allow real estate investors to put off paying taxes, and by increasing tax compliance among high earners.
You’re forgiven if you coughed a little when reading how the plan would be financed. It’s highly unlikely that Congressmen will pass a law that smacks commercial real estate investors right after the pandemic crushed commercial real estate. And as for higher compliance, this implies that the taxman will catch up to the latest tax avoidance maneuvers by the wealthy, something that has never happened.
It’s more likely that Congress will pass a new tax break for the wealthy under a Biden administration by taking the limit off of state and local tax (SALT) deductions, which dramatically favors people who live in densely populated, expensive areas, such as New York City, L.A., Chicago, and San Francisco.