Biden's proposed tax hike could hit Americans earning $200,000
US President-elect Joe Biden speaks after a meeting with governors in Wilmington, Delaware, on November 19, 2020. - Biden said today he would not order a nationwide shutdown to fight the Covid-19 pandemic despite a surge in cases. (Photo by JIM WATSO
President Biden has repeatedly pledged to raise taxes on any American earning more than $400,000, but promised — as recently as this week — that no one making less than that will see "one single penny in additional federal tax."
But White House press secretary Jen Psaki clarified on Wednesday that Biden's proposed $400,000 threshold for tax increases applies to families, rather than individuals, meaning the hike could hit individuals who earn $200,000 a year if they are married to someone who makes the same amount.
Psaki did not specify a threshold for individual earners.
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Biden is eyeing the next big-ticket economic bill as a vehicle for one of the major tax hikes in close to 30 years, according to Bloomberg News, citing a person familiar with the matter.
The planned changes include: raising the corporate tax rate to 28% from 21%, raising the income tax rate on individuals earning more than $400,000, expanding the estate tax, creating a higher capital-gains tax rate for individuals earning at least $1 million annually and paring back tax preferences for so-called pass-through businesses.
"Anybody making more than $400,000 will see a small-to-a-significant tax increase," Biden said during an interview on ABC’s "Good Morning America" that aired Wednesday. "You make less than $400,000, you won’t see one single penny in additional federal tax."
The proposed tax increases mostly mirror Biden's proposals during the 2020 presidential campaign, when he vowed to reverse former President Donald Trump's 2017 tax cuts on "day one" of his presidency. That includes raising the rate paid by corporations and wealthy Americans and making the tax code more progressive.
Biden acknowledged that he's unlikely to secure any Republican support for any type of tax increases, but said he would receive Democratic votes.
Any tax increases included in the legislation would likely take effect beginning in 2022, with some lawmakers wary of raising rates until the economy more fully recovers from the coronavirus pandemic.
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It's unclear what other measures would be included in the proposal, but on the campaign trail, Biden emphasized the need for new infrastructure investments and measures to combat climate change, as well as ways to revitalize the manufacturing industry and revamp housing, education and health care.
Raising taxes will serve as a key test for the nascent administration as it navigates a 50-50 Senate in which moderate Democratic lawmakers like Joe Manchin of West Virginia and Kyrsten Sinema of Arizona play an outsized role.
Manchin said earlier this month that he would block the infrastructure bill if the planned multitrillion-dollar measure does not garner support from any Republicans, but indicated he was open to raising taxes to pay for the bill. Otherwise, he said, the nation's skyrocketing debt could trigger "a tremendous deep recession that could lead into a depression if we're not careful."
The legislation would be in addition to the $1.9 trillion relief plan that Biden signed last week, as well as the nearly $4 trillion in stimulus measures under Trump.
The nation's deficit totaled a record $3.1 trillion for the 2020 fiscal year, and the national debt more than $28 trillion.
An analysis of Biden's tax plan conducted by the Tax Policy Center estimated it would raise $2.1 trillion in new revenue over a decade.