Biden's tax plan would cost richest Americans an extra $1.5M next year, analysis finds
Wealthiest Americans could see after-tax income fall by 16.8% under Biden's agenda
Rep. Kevin Brady, R-Texas, on how the Democrats raising taxes will lead to companies moving out of the U.S. He also discusses the decision to not seek reelection.
The top sliver of U.S. households could see their tax bill climb substantially under the spending plan introduced earlier this year by President Biden.
That's according to a new analysis published by the Urban-Brookings Tax Policy Center, which found that the wealthiest 0.1% of Americans – who earn at least $3.6 million – would pay an additional $1.56 million in federal taxes each year if Congress approves Biden's sweeping tax and spending proposal. Their after-tax income would plunge by about 16.8%, the study said.
By comparison, the top 1% of income-earners would see their tax bill increase by $213,530, while the top 4% would pay an extra $5,090.
WHAT BIDEN'S CAPITAL GAINS TAX PROPOSAL COULD MEAN FOR YOUR WALLET
Biden has called for substantially raising the taxes paid by the wealthy and corporations to fund his "Build Back Better" economic agenda, which would combat climate and expand the government-funded social safety net by providing free community college, establishing universal pre-kindergarten, bolstering care for elderly and disabled Americans and give tax credits to low- and middle-income families.
Those measures would be paid for by reversing part of Republicans' 2017 tax law, including raising the top capital gains tax to 39.6% from 20% for Americans earning more than $1 million and restoring the top individual income tax rate would increase to 39.6% from 37% for families with joint taxable income of about $509,300 and individuals earning more than $452,700.
Biden has also proposed eliminating the so-called stepped-up basis, which could substantially increase taxes at death for the affluent.
BIDEN'S PLANNED CAPITALS GAINS TAX HIKE COULD SLASH US REVENUE BY $33B
In all, the changes proposed by the Biden administration would generate about $88.4 billion in new tax revenue, according to a separate analysis conducted by the Institute on Taxation and Economic Policy.
Some Americans can also expect to receive a bigger tax refund if Biden's plan becomes law. The proposal would extend through 2025 an expanded version of the child tax credit that Democrats passed earlier this year with the American Rescue Plan.
The enhanced credit provides low- and middle-income parents with up to $3,000 for every child ages 6 to 17 and $3,600 for every child under age 6. The expanded amounts are tapered off once income hits $75,000 for individuals and $150,000 for married couples. If families earn too much to qualify for the sweetened tax credits, they can still receive the $2,000 credit for their children if their income level is below $200,000 for individuals and $400,000 for married couples.
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For instance, a family with a 10-year-old and a 4-year-old would be eligible for a credit of $6,600 if they earn less than $150,000.