First Trust Advisors Chief Economist Brian Wesbury and Harbor Life Senior Director Heather Zumarraga on infrastructure, interest rates and economic growth.
President Biden repeatedly pledged during the 2020 campaign to not raise taxes for Americans earning less than $400,000, but a new analysis suggests that nearly 60% of taxpayers would pay more under his proposals.
Findings from the Tax Policy Center, a nonpartisan think tank based in Washington, show that while most of Biden's proposed tax increases would be paid by those earning more than $800,000 annually, a small burden would also be borne by some middle-income families.
Three-quarters of households earning between $75,000 and $100,000 annually would face pay an additional $440 per year in taxes under Biden's tax hikes, according to the data.
At the same time, about 69% of those earning between $100,000 and $200,000 would see their tax bill rise by $830 on average, while 83.7% of those earning between $200,000 and $500,000 would see an increase of $2,040 on average.
WHAT BIDEN'S CAPITAL GAINS TAX PROPOSAL COULD MEAN FOR YOUR WALLET
Still, that pales in comparison to the tax bite that the richest Americans would pay: The analysis shows that about 99.8% of those earning between $500,000 and $1 million would pay $8,810 more each year in taxes. Americans earning more than $1 million would have a tax bill that's on average about $265,939 higher.
Biden has called for a slew of tax hikes, including raising the corporate tax rate to 28% from 21%, nearly doubling the capital gains tax rate to 39.6% from 21%, restoring the top individual income tax rate to 39.6% from 37% and taxing capital gains at death.
That new top rate – which reverses part of the Trump-era Tax Cuts and Jobs Act – would apply to single individuals with taxable income of more than $452,700 and married couples with joint taxable income of $509,300, according to the president's $6 trillion budget proposal released in May.
Heads of households earning more than $481,000 and married individuals filing separate tax returns with income over $254,650 would also pay the higher rate.
As a result, while Biden is not directly raising taxes on those earning less than $400,000, some low- and middle-income Americans would see their tax bill rise indirectly due to the higher rates imposed on corporations.
BIDEN'S PLANNED CAPITALS GAINS TAX HIKE COULD SLASH US REVENUE BY $33B
So while workers making $75,000 annually would not pay a higher individual income tax rate under Biden's proposal, they would see a share of their income shrink due to lower investment earnings and compensation – a byproduct of the higher corporate tax rate, according to the Tax Policy Center analysis.
"For those looking to see if Biden kept his promise to not raise taxes for those making $400,000 or less, the answer is: Mostly, but not entirely," Howard Gleckman, a senior fellow at the think tank, wrote. "Including corporate tax increases, most households would pay more in 2022. About three-quarters of middle-income households would face a tax increase averaging about $300. But nearly all would be a result of those higher corporate taxes."
That's also not to mention the tax credits included in Biden's tax and spending proposals: While most Americans would see their tax bill incrementally rise, many would also benefit from the expanded child tax credit and the earned income tax credit.
Factoring in the tax credits and the tax hikes, those earning between $100,000 and $200,000 a year would on average pay about $110 less to the government. Americans earning between $75,000 and $100,000 would pay about $240 less on average, while those earning between $50,000 and $75,000 would pay about $540 less.
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Revenue generated by the tax increases would be used to pay for Biden's sweeping spending plan that seeks to dramatically boost federal investment in education, child care and paid family leave. Billed by the White House as a "once-in-a-generation investment" in the nation's future, the plan includes $1 trillion in spending over the next decade, as well as $800 billion in tax credits for the middle class.
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Biden's tax proposal means that 60% of Americans could pay more: Here's how much - Fox Business
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