Federal income taxes would rise significantly for high-income households under policies proposed by President Biden, while middle- and lower-income households would see taxes decrease, according to a new analysis by the Tax Policy Center.
The top 1% of households, which earn at least $800,000, would pay more than $213,000 on average next year under Biden’s tax plans, while the top 0.1% of households, earning at least $3.6 million, would pay $1.6 million more on average.
At the other end of the income scale, households earning less than $26,000 would see their taxes fall by $600 on average, while households earning between $52,000 and $92,000 would pay $300 less on average. Low-income families with children would see a particularly large decline, with taxes paid falling by an average of $3,200.
Rounding up Biden’s proposed tax policies: TPC based its analysis on the changes included in Biden’s 2022 budget request, which are outlined in the Treasury Department’s so-called Green Book.
The proposed policies include extending the recent but temporary increases in the Child Tax Credit, the Child and Dependent Care Tax Credit and the Earned Income Tax Credit, all of which benefit low- and middle-income households. TPC also looked at the effects of Biden’s proposed increases to the top income tax rate, capital gains taxes and the estate tax, as well as an increase in business tax rates, which affect high-income households the most.
The bottom line: “Biden is proposing major changes in the US tax code,” says TPC’s Howard Gleckman. “And, as he has been saying for a year, they largely are split between tax cuts for families with children and tax increases on high-income households and corporations.”
In an opinion piece Wednesday, Greg Sargent of The Washington Post said the TPC analysis shows that Biden’s proposed policies would impose “a surprisingly significant tax hike” on high earners, while delivering “a significantly larger financial lift to ordinary American families with children — via a tax cut — than you might have thought.”
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