Working Americans Affordability Tax Credit Act

What Would Change

Today, many working Americans do not receive a direct monthly tax credit. Very wealthy individuals and certain trusts can defer taxes on investment gains until assets are sold, and on certain executive compensation until it is paid out. Gifts and bequests of assets generally transfer with the original cost basis, allowing heirs to avoid immediate capital gains tax. Certain investments like qualified small business stock and Qualified Opportunity Funds offer special tax exclusions or deferrals. Private placement life insurance and annuity contracts also have specific tax treatments, including an exclusion for death benefits. If this bill becomes law, eligible working Americans would receive a new monthly tax credit of $350 ($700 for joint filers). For applicable taxpayers (individuals with over $100 million in income or $1 billion in assets for three consecutive years, and certain trusts/estates), taxes on tradable covered assets would be recognized annually, even if not sold. Transfers of nontradable covered assets, including gifts and bequests, would be treated as sales, and an interest charge would apply to deferred gains. Tax deferral for certain executive compensation would end, and severance pay would face a 10% tax. The tax exclusion for death benefits from private placement life insurance for applicable taxpayers would be repealed, and other amounts from these contracts would be taxed differently. Benefits for qualified small business stock and Qualified Opportunity Fund investments would also be reduced or eliminated for applicable taxpayers.