Joe Biden would raise income taxes on the top 1% of Americans by 17% or an average of $299,000 a year, according to an independent analysis of the Democratic presidential candidate’s tax plan.
The analysis by the nonpartisan Tax Policy Center, released on March 5, estimates that income taxes would go up for all Americans, but the largest raises in both dollar and percentage amounts would be on the wealthiest. Almost 93% of the increases would affect those in the top quintile of taxpayers, the Tax Policy Center found.
The very richest taxpayers, the top 10th of 1%, would see their taxes go up by an average of $1.8 million a year.
The analysis had some good news for Biden, however. While the campaign estimated his tax plan would raise $3.2 trillion over the next 10 years, the Tax Policy Center found that it would actually raise $4 trillion. That contrasts with an earlier analysis from the Penn Wharton Budget Model, which estimated it would raise just $2.3 trillion.
Regardless of which estimate is used, Biden’s plan would raise significantly more revenue than past Democratic presidential candidates have proposed. But his major remaining rival for the nomination, Vermont Senator Bernie Sanders, has called for tens of trillions more in tax hikes, including tax rates of up to 97.5% on some of the wealthiest Americans.
The Tax Policy Center, which is a joint project of the Urban Institute and the Brookings Institution, found that that over the next 10 years Biden’s plan would raise $2 trillion from higher taxes on the wealthy and another $2 trillion from higher taxes on corporations.
Some of that money would be used to fund proposed tax credits and other breaks for family caregiving, student loan forgiveness and electric cars, among other things.
Biden has proposed rolling back cuts for taxpayers making more than $400,000 a year signed into law by President Donald Trump in 2017. He would also limit itemized deductions for taxpayers in higher-income brackets, tax capital gains and dividends like ordinary income for those making more than $1 million and reinstate the payroll tax for income above $400,000.
As examples, the analysis says that taxpayers making less than $26,000 a year would see an average tax increase of $30 a year. Those making between $52,000 and $93,000 would see an average increase of $260. And those in the top 1% -- making more than $837,000 -- would see an average increase of about $299,000.
Biden also proposes raising the top corporate income tax rate from 21% to 28% and imposing a 15% minimum tax on companies’ book income, or financial income before taxes. His plan would also double the existing minimum tax on profits earned by foreign subsidiaries of U.S. firms from 10.5% to 21%.
The analysis did not look at Biden’s spending proposals, but the Tax Policy Center estimated that other tax breaks he would change would reduce federal revenue by about $270 billion.
Biden would reduce tax breaks for investments in fossil-fuel production and commercial real estate. He proposes new tax credits for buying electric cars and investing in renewable energy as well as other breaks for student loans and family caregiving.
He would also change the break for investing in an individual retirement account from a deduction to a refundable tax credit and automatically enroll most workers without pensions in IRAs.
—Bloomberg News provided this article.
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