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United States: Greenbook offers few surprises for a second Biden term

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In brief

On 9 March 2024, the Biden Administration released its proposed budget for fiscal year 2025, and the Treasury Department released its General Explanations of the Administration’s Fiscal Year 2025 Budget Proposals, commonly known as the “Greenbook.” Many of the proposals in this year’s Greenbook appeared in earlier years, but a few proposals are new or modified (as noted below). Due to the divided Congress and competing political priorities during a general election year, there is little chance that any of the Greenbook proposals will be passed into law in 2024. However, the Greenbook illustrates the consistency of the President’s tax policy objectives during his first term and maps out priorities for a possible second term. Accordingly, taxpayers should consider the Greenbook’s provisions when identifying and advocating for their 2025 legislative priorities. In this article, we focus our analysis on new or modified proposals and review certain carryover proposals.

Key takeaways

As the saying goes, the President proposes [a budget], and Congress disposes [of it]. As we saw with the failed effort to pass the Build Back Better Act, the Biden Administration was unable to garner enough support to pass several of the Greenbook proposals when Democrats had the majority in both the House of Representatives and Senate. That said, the Greenbook provides a platform for an Administration to propose tax policies, so that those provisions can be studied further and potentially developed for future implementation. Proposals in past Greenbooks that were not enacted in the short term have been picked up in legislation years later. As a result, it is important for US businesses to continue educating Congress of the projected consequences of any tax proposals to guide the evolution and adoption of these proposals in the future.

Though many of the proposals in the FY25 Greenbook are carry-overs from the FY24 Greenbook, there are some new recommendations and modifications to prior proposals. We will highlight some of these changes, as well as some carry-over proposals that would be significant if enacted, including:

  • increases to various rates affecting corporations and high net worth individuals
  • proposals for aligning the Code with the OECD Pillar Two rules and modifying other US international tax rules
  • new rules for tax-free spin-offs
  • expansion of the denial of deductions for salaries of highly compensated employees
  • measures that align with recently announced IRS enforcement efforts
  • reforms aimed at modernization of IRS administration
  • modifications to previously-proposed crypto rules

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Author

Alexandra Minkovich is a partner in Baker McKenzie's North American Tax Practice with more than fifteen years of experience handling a variety of tax, tax controversy, and legislative and regulatory matters. She also brings significant experience representing clients with respect to domestic tax issues, particularly in the life sciences, pharmaceutical, retail, and manufacturing industries, and is well versed in administrative law. Immediately prior to joining the Firm, Ms. Minkovich served as Associate Tax Legislative Counsel with the US Department of Treasury, Office of Tax Policy. In that role, Ms. Minkovich advised the Assistant Secretary (Tax Policy) and General Counsel regarding tax policy considerations in regulations and Internal Revenue Bulletin guidance, provided advice on tax legislative proposals, and provided litigation advice regarding the validity of Treasury and IRS guidance. She also provided technical comments on tax legislation to the Senate Committee on Finance and the House Ways & Means Committee, as well as to individual members’ offices. Ms. Minkovich speaks regularly at seminars and writes on a variety of topics related to legislative and regulatory developments, and administrative law.

Author

Katie Rimpfel is an associate in Baker McKenzie’s North America Tax Practice Group in Washington, DC. Katie practices in the areas of tax planning, tax controversy and transfer pricing. She advises major multinational corporations and individuals on US federal income taxation matters.

Author

Elizabeth Boone joined Baker McKenzie in November 2019 as a Knowledge Lawyer for the North America Tax Practice Group. She supports the Practice Group on knowledge management matters; focusing heavily on thought leadership, U.S. and global tax policy, training agendas, and information exchange. Before joining Baker McKenzie, Elizabeth was with Bloomberg Tax and Accounting, where she focused on the taxation of U.S.–based businesses. She also served as an Attorney Advisor to Ret. Judge Diane L. Kroupa of the United States Tax Court.

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