On April 28th, the White House released details on The American Families Plan. This is a $1.8 trillion spending and tax proposal intended to enhance or create universal benefits for areas impacting families including child care, paid family/medical leave, universal access to preschool, tuition-free two-year community college and related tax cuts for low and middle income families. $1 trillion of the cost of the bill is investment in the proposed programs and $800 billion is in proposed tax cuts. To pay for these programs and tax cuts, the president has proposed several tax increases that could impact wealthy individuals and high earners (specific tax increase proposals are summarized below). The proposals included in this plan were all part of the broader tax plan that President Biden released during his candidacy last summer. While not delivered in a comprehensive tax bill, we are seeing that the president’s path may be to attach pieces of that plan to a series of proposals such as The American Families Plan and The American Jobs Plan. To be clear, the details released on April 28th are a plan (not law) and are a starting place for the legislative process. From here, we would expect that there will be political discussions on what type of amendments would be plausible and negotiations will ensue to determine where they will need to make concessions during the process of building and maintaining support. These plans face a difficult path in Congress with a razor thin majority in the Senate and where simple majority may be hard to achieve again soon after a stimulus Bill and a $2 trillion infrastructure plan that was proposed on March 31st. Tax Increases proposed in the The American Families Plan to raise $1.5 trillion over 10 years: No impact of tax increases on taxpayers earning less than $400k Increase top income rate from 37% to 39.6% (revert back to law before the 2017 Tax Act) Increase tax rate on long term capital gains and dividends over $1 million per household from 20% to 39.6% Eliminate “stepped-up” basis at death for gains in excess of $1M ($2.5M per couple when combined with existing real estate exemptions) Treat carried interest as ordinary income (top tax rate of 39.6%) Eliminate tax deferral associated with like-kind exchanges for gains greater than $500k Extend current limit on excess business losses for those making more than $1M Apply 3.8% Net Investment Income Tax (Affordable Care Act tax) on all investors who have income over $400k Of note is that there was no mention of any changes to the estate/gift tax exemption and tax rate. There is also no mention of lessening the impact of the limitations imposed on the State and Local tax deduction on federal income tax returns (the SALT deduction). We are closely following these developments and are available for questions as these proposals could have a material impact on many of our clients. The views expressed are those of Brown Advisory as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be and should not be relied upon as investment advice and are not intended to be a forecast of future events or a guarantee of future results. Past performance is not a guarantee of future performance and you may not get back the amount invested. The information provided in this material is not intended to be and should not be considered to be a recommendation or suggestion to engage in or refrain from a particular course of action or to make or hold a particular investment or pursue a particular investment strategy, including whether or not to buy, sell, or hold any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the author on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is intended solely for our clients and prospective clients, is for informational purposes only, and is not individually tailored for or directed to any particular client or prospective client. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.