Democrats' proposed tax hikes could eventually hit middle-class Americans: Here's how
Dems' proposal could mean higher taxes for middle-income workers
Some Democrats look into SALT tax deductions for $3.5 trillion spending bill
Congressional correspondent Chad Pergram has the latest on the bill on 'Cavuto: Coast to Coast'
House Democrats unveiled a sweeping tax-hike plan this week that dramatically raises the rates paid by wealthy Americans and corporations – but the proposal could also have long-term implications for the middle class.
The proposal would roll back key parts of Republicans' 2017 tax law, including restoring the top individual income rate to 39.6%.
BIDEN TAX PLAN CALCULATOR: HOW MUCH WOULD YOU PAY UNDER THE NEW PROPOSALS?
The new rate would apply to single individuals with taxable income of more than $400,000, according to a copy of the legislative outline. It would also apply to married individuals filing jointly whose taxable income tops $450,000; to heads of households with income topping $425,000; to married individuals filing separate returns over $225,000; and to estates and trusts over $12,500.
The plan also includes a 3% surcharge on income exceeding $5 million and keeps in place a 3.8% net investment income tax.
A distributional analysis released by the nonpartisan Joint Committee on Taxation on Tuesday found that taxes would only increase for the top sliver of households in the first year the increases were implemented. But over time, once the expansion of the child tax credit ended, the average tax rate would also increase for lower earners.
SOME RETIREES COULD SEE 5% SOCIAL SECURITY RAISE WITH BIDEN AS PRESIDENT
By 2027, the average tax rate for individuals earning between $50,000 and $75,000 would climb about 1%, the analysis shows. The rate would be slightly higher for individuals earning between $75,000 and $100,000, rising by 1.3%. The tax rate would increase 1.5% for those making between $100,000 and $200,000 would see a 1.5% increase.
Average rates would also be higher for those income brackets through 2031, the analysis shows.
Still, the increases seemingly contradict Biden's campaign promise that no one earning less than $400,000 would pay higher taxes if he were elected.
"Anybody making more than $400,000 will see a small to a significant tax increase," Biden told ABC News earlier this year. "If you make less than $400,000, you won't see one single penny in additional federal tax.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Assuming the proposal becomes law – which hinges on a deeply divided Congress – the new tax rate would start to apply during the 2022 tax year. It would generate an estimated $2.1 trillion over the next decade, according to an estimate from the Joint Committee on Taxation.
The top rate is currently paid by single individuals earning more than $518,401 and married individuals filing jointly who earn more than $622,051.
The enhanced child tax credit is poised to end next year, although Democrats are hoping to include a five-year expansion as part of the $3.5 trillion tax and spending bill, which would dramatically expand the social safety net if enacted.