Details Released for Green Book Tax Proposals | Bennett Thrasher Skip to main content

On March 28, 2022, the Treasury Department released details of the administration’s tax-related budget recommendations for FY2023, commonly referred to as the “Green Book.” It contains recommendations from the administration to Congress for forthcoming tax legislation.

Last year’s Green Book spawned both the Infrastructure Investment and Jobs Act (which was passed into law) and the Build Back Better Act (“BBBA”), which passed the House, but was stalled in the Senate. There remains hope by the administration that the BBBA will gain enough support to move forward in some fashion, but that remains to be seen. Accordingly, the Green Book proposals are intended to work in tandem with the BBBA, as if the BBBA were already enacted.

Previous Developments

The Green Book reiterates many revenue provisions that were part of the BBBA including:

  • Corporate Rate Increases: Increasing the top marginal rate on C corporations from 21% to 28%
  • Individual Rate Increases: Increasing the top marginal rate on individuals from 37% to 39.6% for high earners
  • Capital Gain Rate Increases: Increasing capital gains rate from a maximum rate of 20% to a maximum rate of 39.6% for high earners
  • Carried Interest Rules: Taxing certain carried interests as ordinary income
  • Repealing Like Kind Exchanges: Eliminating deferral of gain above nominal limitations
  • Limiting Conservation Easement Deductions to two and one-half times basis

You can read more about these proposals in our discussion of the BBBA in this article.

New Developments

The Green Book introduces several new revenue raising proposals. A few of the more prominent proposals are discussed below.

New Minimum Tax on Wealthy Individuals

This proposal would impose a minimum tax of 20% on the total income of an individual inclusive of unrealized capital gains for all taxpayers with wealth in excess of $100 million. The proposal includes rules to allow prior taxes of unrealized gains to offset future taxes of realized gains.

Treating Transfers of Appreciated Property by Gift or on Death as Realization Events

This proposal would require a donor or deceased owner of appreciated property to recognize a gain upon transfer by gift of bequest of appreciated property. Certain exclusions would apply, and note that under current law, gain is typically not recognized.

Limiting Use of Donor Advised Funds

This proposal would limit the use of donor advised funds to avoid private foundation payout requirements.

Repealing Most Fossil Fuel Tax Incentives

This proposal would repeal a number of fossil fuel friendly incentives including

  • Enhanced oil recovery credit,
  • Credit for oil and gas from marginal wells,
  • Expensing of intangible drilling costs,
  • Exception to passive loss rules for working interests in oil and gas wells,
  • Use of percentage depletion for oil and gas,
  • Expensing of exploration and development costs, and
  • Use of percentage depletion for hard mineral fossil fuels.

New Markets Credit

This proposal would permanently extend the new markets credit.

Adopting Under Taxed Profits Rule

Designed to raise more revenues than BEAT, this proposal would repeal the BEAT tax and replace it with a Under Taxed Profits Rule (“UTPR”). The UTPR is similar to the OECD Pillar Two Model Rules that are being adopted or evaluated by many of the US’s trading partners. The UPTR would apply primarily to foreign based multinationals with US subsidiaries with group revenues of $850 million or more. This proposal also includes a domestic minimum top-up tax that would protect US revenues from the imposition of UTPR imposed by other countries.

Onshoring Tax Incentives

This provision is intended to benefit companies that are willing to reduce or eliminate a trade or business currently conducted outside the U.S. and start up, expand or otherwise move the same trade or business to the U.S. To the extent this action results in an increase in U.S. jobs, the proposal would provide for a general business credit equal to ten percent of the eligible expenses incurred in connection with the onshoring. Furthermore, the proposal would disallow deductions for expenses paid or incurred in connection with offshoring a US trade or business.

Taxing Unrecaptured Gains as Ordinary Income

This proposal would recapture all previously deducted depreciation of real property as ordinary income. Currently, only deprecation in excess of straight-line depreciation must be recaptured.

Improving Tax Administration

In addition to proposed tax provisions, the Green Book encourages a number of matters to improve tax administration and compliance including:

  • Extending the statute of limitations for listed transactions to six years,
  • Allowing for the refunding of net negative changes of partnership audits under the centralized partnership audit regime,
  • Imposing higher penalties on taxpayer who take positions contrary to the regulations and fail to disclose,
  • Increasing penalties on preparers for willful, reckless or unreasonable understatements, and
  • Increased reporting requirements on financial institutions and digital asset brokers.

Action Items

As mentioned before, these proposals are merely recommendations. Congress can adopt some, all or none of these proposals. We must wait and see if the BBBA will be resurrected or if new, more tailored legislation emerges.

Contact Us

We will continue to monitor developments related to these proposed tax changes and communicate any significant changes that will impact our clients. For more information, please contact your Bennett Thrasher tax advisor by emailing