What Biden’s vision means for taxation and private markets

What Biden’s vision means for taxation and private markets

Author: The Carta Policy Team
Read time:  11 minutes
Published date:  8 March 2024
The State of the Union address and other events in Washington have started to solidify the political and policy dynamics that will shape the remainder of the year.


  • Biden presents his vision for the country as a 2020 rematch looms

  • Coming tax fight looms large for funds and private markets

  • Corporate Transparency Act ruled unconstitutional by federal district court

  • SEC adopts watered-down climate disclosure rule

  • House passes legislation to expand capital access and investment opportunities

  • Crypto remains focus for legislators and regulators

President Joe Biden and former President Donald Trump became their parties’ presumptive nominees after this week’s Super Tuesday primary elections in which each took commanding delegate leads, forcing their primary opponents out of the race. Senator Kyrsten Sinema, an ally of the innovation economy, announced she would not seek reelection. Congress is working through funding packages with deadlines looming in March. And President Biden outlined his vision for the country in his annual State of the Union. 

The shifts in Washington this week have started to solidify the political and policy dynamics that will shape the remainder of the year. This is going to be a longer Policy Weekly…thanks in advance for reading. 

Biden presents his vision for the country as a 2020 rematch looms

President Biden delivered his third State of the Union last night, outlining his vision for the country and the questions that will shape the election. He stressed the importance of supporting democracy both at home (election integrity, voting rights) and abroad (support for Ukraine, Israel); creating a tax code that protects the middle class and asks the wealthy to “pay their fair share”; and the importance of working together on the stalled immigration package, educating our kids and workforce, making housing more affordable, and investing in technology to drive innovation at home and compete globally.  

Although lighter on the financial policy front, the President outlined his vision for tax policy:

  • Increase corporate tax rate: Biden supports bumping the corporate rate up to 28 percent from the current 21 percent rate under the Tax Cuts and Jobs Act (TCJA), and increasing the corporate minimum tax, now 15 percent, up to 21 percent. 

  • Establish 25 percent minimum tax: Also known as the "billionaire tax" proposal, Biden would impose a 25 percent minimum tax on income for Americans with over $100 million in wealth.

  • Increase Medicare tax rate: Biden proposes to increase the Medicare tax rate for individuals with income above $400,000.

Why it matters: The State of the Union allowed the President to set out his agenda, which will create the dividing lines between parties. This will be particularly important for tax policy. At the end of 2025, the Trump-era tax cuts will expire. Regardless of who wins the election, the next Congress will be forced to confront tax policy as policymakers seek to address those expiring provisions. The debate will not be limited to those parameters currently in place, however; every industry will seek to add its key issues and protect against having any benefits curtailed as policymakers look to offset other tax breaks.  

This means there will be fights over larger issues like the corporate rate, the personal rate, and research and development (R&D) tax treatment, but also over whether policymakers try to cut favorable carried interest tax treatment or curtail qualified small business stock, or even assess taxes on unrealized gains for the wealthy. The policy may not be finalized until the end of 2025, but the debate starts now. 

More on tax: Congress has a tax package pending—H.R. 7024, the Tax Relief for American Families and Workers Act—that would revive expired business tax provisions, including full R&D expensing, as well as raise the current Child Tax Credit (CTC). However, that bill continues to face obstacles in the Senate due to concerns expressed by GOP lawmakers. 

  • Senate Finance Committee Chair Ron Wyden is working to pass the bill in the Senate at the earliest opportunity—with the revised objective of completing the task by April 15, the end of the 2024 tax filing season. 

  • Senator Crapo, the tax-writing committee’s ranking Republican, continues to signal Republicans’ unease with the broader expansion of the CTC.

Call to action: The Carta team has been closely following the tax package and pushing for the restoration of full R&D expensing. Join the effort by contacting your U.S. senators to let them know that R&D matters to the innovation community. 

>> Download the email template here

Corporate Transparency Act ruled unconstitutional by federal district court

Last Friday, a federal judge in Alabama ruled that the Corporate Transparency Act (CTA) was unconstitutional. The result of the lawsuit, which was brought forth by the National Small Business Association (NSBA), has created uncertainty surrounding the CTA’s filing obligations for businesses. 

There are a couple of key implications stemming from the lawsuit: 

  • FinCEN announced it is complying with the recent court decision and not enforcing the CTA against the plaintiffs of the lawsuit, which means the current ruling is limited to parties of the lawsuit. This means that members of NSBA who joined before March 1, 2024 will be exempt from filing until any further legal action is resolved. 

  • More lawsuits may come. Expect additional challenges along these lines to expand the class of companies protected from enforcement.

  • The government will likely appeal the District Court’s decision. This may take time and it is too early to predict the outcome.

What’s next: Most new business entities formed in 2024 are still bound by the CTA and should plan to file with FinCEN (within 90 days of formation) until further notice. Businesses should discuss their filing obligations with their legal counsel.

Bottom line: This is not the end, but rather the latest in what will be a longer legal saga.

Carta is here to help stakeholders stay updated on the latest developments and explain how they impact the small business community. We are also helping the ecosystem painlessly navigate CTA compliance, including by offering a free CTA filing service to newly formed companies.

SEC adopts watered-down climate disclosure rule

The SEC adopted its long-anticipated climate-related disclosure rules, though they were significantly watered down compared to the original proposal. 

  • What’s in: The rules will require public companies to disclose climate-related risks, activities to mitigate such risks, costs of severe weather events, and information related to any climate-related targets or goals that are material to the business, among other items. The rules also require Scope 1 and Scope 2 greenhouse gas (GHG) emissions disclosures subject to a materiality requirement and the filing of an attestation report to those disclosures.  

  • What’s out: The most controversial aspect of the proposal— Scope 3 emission disclosures—was nixed from the final rule. Scope 3 disclosures would have required companies to report supply-chain and end-user emissions. Its inclusion would have had indirect impacts on private companies in the supply chain by forcing them to account for and provide emissions reporting to inform public company disclosures. The Commission also carved out smaller reporting companies and emerging growth companies from the GHG emissions disclosure requirements.

Critics claimed the SEC went beyond its authority in mandating disclosures based on climate-specific factors as opposed to materiality-focused standards, not to mention the significant costs that compliance will add to being a public company. But supporters of enhanced climate-related reporting were not happy either. They claim the rules represent the “bare minimum” and have criticized Chair Gensler for caving to corporate interests, particularly with respect to dropping Scope 3 disclosures.

Impact on private companies and funds: Private companies are not subject to SEC reporting requirements, but Scope 3 reporting requirements would have had indirect impacts if this provision had been adopted. Private companies that are part of public company supply and distribution chains would have needed to account for and provide emissions information to inform public company disclosures. However, private companies may not escape totally unscathed as California recently adopted legislation to require Scope 3 emissions disclosures, and other jurisdictions (notably the EU) are moving toward full-scale emissions reporting.  

What’s next: The SEC climate-related disclosure rules will be phased in over the next decade beginning in 2025, but they will face legal and legislative scrutiny along the way. States’ attorneys general, the business community, and even climate activists have already filed suit or are considering doing so—which could be a first for a rule to be challenged from both sides.  

House passes capital markets package

The House passed H.R. 2799, the Expanding Access to Capital Act, which aims to increase access to capital and investment opportunities, particularly outside of traditional coastal funding hubs. Carta supports this effort, which contained a number of provisions that would bolster capital formation and the innovation economy, including:

  • DEAL Act, which would expand qualifying venture capital investments to include secondaries and investments in other funds. Under the current parameters of the venture capital exemption, funds are largely limited to primary investments in private companies. 

  • ICAN Act, which would expand the size and investor parameters of qualifying venture capital funds, which will allow emerging funds to raise capital from more investors with smaller check sizes. 

  • Increasing Investor Opportunities Act, which would remove the SEC staff-imposed cap that limits closed-end fund investments in private markets and allow more retail investors to access these opportunities under regulatory protections offered by publicly traded, registered funds.

  • Gig Worker Equity Compensation Act, which would enable companies to compensate nontraditional or “gig” workers with equity in addition to a wage and help to bolster ownership. 

While a number of individual provisions were bipartisan, the overall package failed to garner any Democratic support. This bill advances within the broader context of policymakers wrestling with bank capital regulations that may impair lending to startups and small businesses, as well as a higher interest rate environment that makes borrowing more costly. Driving capital to funds and entrepreneurs across the country will be an important prong to drive innovation and economic growth, and this bill would help.

What’s next: While the overall package is not likely to advance in the Senate, there are opportunities to build bipartisan support and advance key components to benefit the venture ecosystem. The path forward will not be easy and will require continued engagement and education.

Crypto remains focus for legislators and regulators

As Bitcoin hit its all-time high this week, cryptocurrency remained a hot topic in Washington. We’ve pulled out a few of the highlights below:

  • CBDCs: Fed Chair Jay Powell signaled that the Federal Reserve would not establish a central bank digital currency without clear congressional approval. Powell also clarified that if the Fed were to move forward, it would issue a CBDC through banks. 

  • Crypto regulation: CFTC Chair Behnam reiterated the need for crypto regulation and urged Congress to grant the CFTC oversight and regulatory authority over the crypto spot markets. Behnam also reiterated that ETH is a commodity (a position SEC Chair Gensler has not yet taken) and agreed that there is ambiguity as to how crypto businesses should operate in the U.S., bolstering the case for a comprehensive crypto regulatory framework.

  • SEC enforcement: This week, the SEC charged ShapeShift AG with acting as an unregistered dealer in connection with its operation of an online crypto asset trading platform. In response, SEC Commissioners Pierce and Uyeda criticized the decision, arguing  it was “unclear” how ShapeShift was to discern how the SEC was classifying digital assets—noting that the order from the SEC failed to identify which crypto assets were investment contracts and provided no explanation. 

  • Insider trading case: A federal judge ruled this week in an uncontested default judgment that certain crypto assets traded on secondary markets are securities. This ruling could set a precedent affecting how crypto assets are treated in secondary markets and ultimately have implications for the SEC’s other cases against crypto exchanges like Coinbase and Binance. Coinbase has responded to the ruling, noting that default judgements often hold less weight in terms of setting precedent as they are uncontested. 

  • Tax: The IRS received over 120,000 comments on reporting requirements for digital assets, which is the second highest number of comments Treasury and the IRS have ever received on proposed guidance. The most commonly requested changes include: 1) removing DeFi trading platforms from the definition of broker; 2) exempting or removing non-fungible tokens and stablecoins from reporting requirements; 3) mitigating the risk of unauthorized disclosure of personal identification numbers; 4) removing digital asset addresses and identification numbers/hashes from reporting requirements; and 5) delaying the proposed applicable date to allow brokers to build systems to track transactions and basis and build reporting systems. 

News to know

  • PCAOB structure in question. A new lawsuit alleges that the PCAOB has no authority to undertake in-house disciplinary proceedings because it operates as a non-profit independent body overseen by the SEC. The SEC’s own use of in-house administrative law judges is currently the subject of Supreme Court scrutiny.

  • Agencies probe private equity healthcare acquisitions. The Federal Trade Commission, Department of Justice, and Department of Health and Human Services launched a coordinated investigation on the impact of PE firms acquisitions in the health-care space. The regulators said the inquiry was sparked by consumer concerns and worsened patient outcomes, but the Biden administration has also been scrutinizing PE more broadly.

  • Uyeda reiterates concerns with SEC overreach. SEC Commissioner Mark Uyeda cautioned that the SEC has overstepped its authority in several recent rulemakings, including its private fund adviser rules. These rules are currently being challenged in the Fifth Circuit, with a decision expected by May.

  • Judiciary Republicans scrutinize regulators’ surveillance tactics. In a newly released report, Republicans on the House Judiciary Committee accuse financial regulators of engaging in broad and politicized surveillance of consumers. The report alleges that FinCEN officials encouraged banks to use politicized search terms when preparing Suspicious Activity Reports required under anti-money laundering regulations.

  • Treasury finalizes direct pay for clean energy tax credits. The Treasury Department completed final rules to govern one of the two new credit delivery mechanisms authorized by the Inflation Reduction Act: direct pay. This allows qualifying entities to receive direct payments for 12 clean energy tax credits, as well as tax credits for electric vehicles and charging stations. Businesses can also choose elective pay for three of those credits: Advanced Manufacturing (45X), Carbon Oxide Sequestration (45Q), and Clean Hydrogen (45V).

  • White House continues “junk fee” crackdown. The Biden administration furthered its efforts to eliminate so-called “junk fees” with the launch of a new Strike Force on Unfair and Illegal Pricing. The CFPB also finalized a rule to cap credit card late fees at $8, down from $32.

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The Carta Policy Team
Carta’s Policy Team aims to connect the policymaking community and venture ecosystem to build an ownership economy and advance policies that support private companies, their employees, and their investors.