- American households earning less than $400,000 won’t see a tax increase under Joe Biden’s tax plan, but the top 0.1% could end up paying as much as an extra 12.4%, an analysis by the University of Pennsylvania shows.
- The ultrawealthy will also see cuts to their take-home pay due to higher corporate taxes under the Biden plan.
- President Trump said he would seek to lower all Americans’ taxes once again if reelected, but has not shared any plans for how to do so.
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Former Vice President Joe Biden doesn’t plan “the biggest tax increase in history” on “middle-class families, small businesses, and seniors,” as ads run by President Trump’s reelection campaign claim, a new analysis of Biden’s tax plan by the University of Pennsylvania’s Wharton School of Business’ Budget Model found.
Instead, Biden’s plan has Americans with household incomes under $400,000 paying the same tax rate they have been since the president cut taxes in 2017, according to the report.
Wealthier Americans, however, should prepare to pay up. The former vice president proposed a variety of modifications to the current tax law, including repealing parts of Trump’s tax law, raising corporate taxes and taxes on foreign profits, closing loopholes in real estate tax code, and eliminating fossil fuel subsidies.
Even though many Americans won’t see a major difference in their tax bill under this plan, hikes in corporate taxes could slightly decrease their take-home pay and investment returns. This difference is largest for those in the top 1.5%, who Penn economists estimate would get the equivalent of a 17.7% pay cut. The following chart shows what Americans, broken down by class, could expect their effective tax rate to be under Biden’s plan with his proposed corporate taxes factored in.
For many Americans outside the top 1% — those earning $710,000 or more — Biden’s proposed tax rate is still lower than what they were paying before the 2018 Tax Cuts and Jobs Act, the Penn analysis shows. About 80% of the tax increases Biden proposed only affect one-percenters, per the report.
President Trump has promised on the campaign trail to once again cut taxes for all Americans but has yet to release a detailed plan for how to do so, per Bloomberg. The president substantially rolled back taxes with his 2017 Tax Cuts and Jobs Act. Two years after its enactment, economists say it did raise wages, but failed to provide a longterm boost to the economy as promised.