Task 02

Q no 1: What options do companies have available to them to react to the increase in

corporate income taxes that are expected under the Biden Administration? List all that you
find discussed in the Mark Maurer article above.

Proposal would lift the corporate rate to 28% and augment taxes on U.S. companies’
foreign profits therefore many chiefs of financial officer of American corporation have
revealed many options to offset the potential cost increases stemming from the higher tax
rates and many other tax proposals made by USA President administration
The Biden management has lift up the tax rate on the commercial corporation from 21% to
28% to fund the infrastructure plan implementation that would also make it tougher for
foreign- owned businesses with U.S. operations benefits from poignant their earnings
to low- tax countries. Such a proposal may reverse the elements of the tax overhaul
2017 which may reduced the federal tax rates on the corporation from 35%to 21% and
rising minimum tax for global intangible low taxed income to 21% will burden on the
corporation
In accordance with Omaha ,if the Biden has increased this tax rate on these entities
then such a corporation has not sufficient cash flow generation to increase the sales,
return on the investment and capital employed by the owners of the company for
generation of more profits to cope with the operating activities (day to day business
operations ,purchase of the inventory, to pay the creditors),investing activities
(purchase as well as sale proceeds of fixed assets as well as long term investments )
and financing activities . In accordance of John Gimigliano, the financial risks of the
corporation may be increased leading towards the going concern issues
The company spent $875 million on rents for freight cars and other equipment for the
fiscal year ended Dec. 31, down 11.1% from the previous year. Union Pasic’s effective
tax rate was 23.4% in 2020, down from 23.6% in 2019. It expects to allocate about $2.9
billion for capital expenditures in 2021 that is greater as compared to 2.1% from 2020.
Q no 2: How will tax planning help in deciding from among the available options discussed in
answer to question above?
Such a tax planning may be implemented which can help US corporations to cope with their
heavy costs
In his proposal he has implemented heavy taxes on wealthy families that transfer their property
through heritages and on those corporations having highest income which depends upon the
blue wave of Washington.
Those comprise of lifting the top individual income tax rate to 39.6% from its current level of
37% and make longer the 12.4% segment of the Social Security tax which is communal by
employers and employees to earnings over $400,000. Currently, wages up to $137,700 are area
under discussion to the tax. Biden has also concerned for the capital gains rate to rise to 39.6%
for taxpayers with profits over $1 million. Currently, well-heeled shareholder face long-term
capital gains rates of up to 20%.
Biden has concern to get rid of the increase in root that permits successor to obtain possessions
having worth as of last day of life. Instead, any unrealized capital gains would be area under
discussion to tax.
Biden would also diminish the amount that an individual can transport free of parkland and gift
taxes from $11.58 million to $3.5 million in bestow at death and $1 million in life span gifts.