Former Vice President Joe Biden released an "Education Beyond High School" proposal on Tuesday, which he intends to finance by eliminating a tax code loophole and capping the itemized deductions that wealthy Americans can take.
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According to Biden’s campaign, the plan – which calls for investing in community colleges and workforce training programs – is expected to be a “$750 billion investment.”
Biden proposes two ways to fund those costs, which involve "making sure that the super-wealthy pay their fair share." The first is eliminating the stepped-up basis loophole. Typically when an individual purchases something – like a stock or another capital asset – and sells it he is required to pay taxes: Capital gains taxes are paid on the difference between what an individual originally paid for a property or investment vs. what it sells for – at the time it is sold.
If the owner of the property or investment passes away, however, the person who inherits it can sell it immediately and pay no tax. That is because the cost basis has been “stepped up” from the price the deceased owner originally paid for it to its fair-market value on the date it was inherited.
President Obama proposed ending the stepped-up in basis loophole in 2015.
Biden also proposes capping the itemized deductions the wealthiest Americans can take to 28 percent.
The Tax Cuts and Jobs Act nearly doubled the standard deduction, to $12,000 for individuals and $24,000 for married couples filing jointly, which means fewer people have been itemizing.
The law also implemented a $10,000 cap on state and local tax deductions, which has harmed residents in high-tax states.
In the plan, the former vice president said 12 years of education is no longer enough for American workers to compete for a job that pays a middle-class salary, while noting that attending college is not affordable for everyone. His proposal includes calls to provide two years of free community college or other high-quality training program to working individuals and DREAMers, creating a new grant program for community colleges, investing $50 billion in workforce training and apprenticeship programs, among other measures.