Wealthy individuals and corporations would bear the brunt of tax increases proposed by Joe Biden.
The Democratic presidential nominee’s plan would increase taxes by $2.4 trillion over the next 10 years, according to analysis by the Tax Policy Center, a nonpartisan think tank.
Wealthy individuals would pay roughly 40% of the tax increase, while businesses, especially corporations, would pony up the remaining 60%.
On the individual side, Biden’s plan is aimed at taxpayers earning over $400,000. It would increase their income tax rates while limiting the number of deductions they can itemize.
The proposal would also tax capital gains, which currently have a preferential tax rate, as income, which carries a much higher rate, for taxpayers with income above $1 million. It would also tax unrealized capital gains at death while also upping the estate tax for incomes over $400,000.
In 2022, the top 1% of taxpayers would see an average tax increase of roughly $260,000, while the poorest of the taxpayers would see a $750 reduction in what they owe, according to the analysis.
Less wealthy taxpayers would receive a number of tax breaks under Biden’s plan, including an expansion of the refundable child tax credit and a credit for first-time homebuyers.
One bright spot in the report for the wealthy is that the limitation for deducting state and local taxes would be undone. Enacted as part of the 2017 GOP tax reform bill, the limitation is set to expire in 2025, which is expected to occur under a Biden presidency. Ending the limitation would provide relief to taxpayers who take this deduction, who are disproportionately high-income earners.
For corporations, the Biden plan increases the corporate tax rate from 21% to 28% and increases taxes on income earned offshore. The plan also provides tax credits to spur domestic manufacturing. Still, on net, companies would see a tax increase of over $1.3 trillion over the next 10 years.
In speaking with the Biden campaign, the Tax Policy Center noted that the timing for advancing tax legislation is unclear due to the economic effects of the pandemic. The Center based its projections on tax increases being placed into law on January 1, 2022.
