Biden’s Tax Plan Would Raise Just $2.4 Trillion, Report Says
Biden’s Tax Plan Would Raise Just $2.4 Trillion, Report Says
(Bloomberg) -- Democratic presidential nominee Joe Biden’s proposals would increase taxes by $2.4 trillion over a decade -- about $1.6 trillion less than previously estimated partly because of the pandemic’s impact, according to new figures from the Urban-Brookings Tax Policy Center.
The updated estimate revises figures published by the group in early March and takes into account new ideas from the Biden campaign, as well as the slowdown in the economy because of the coronavirus pandemic that likely will force a one-year delay for putting tax increases in effect.
The estimate also excludes some provisions that the left-leaning Tax Policy Center said they could not adequately model, including a measure to repeal some tax breaks for real estate.
The downward revision of the projections illustrates the economic and political realities Biden would face if he were to win the White House. Biden has said he wants to increase tax rates for the wealthy and corporations on “day one” of his presidency, but the need to provide economic stimulus to households and businesses will likely take precedent in an economy that is unable to immediate absorb large tax bikes.
“We assume that the effective date for most provisions in the Biden tax plan would be January 1, 2022, one year later than we assumed in March,” the report, released Thursday, said. “This delay reflects the uncertain legislative environment caused by the ongoing COVID-19 pandemic and related economic disruptions.”
Mark Mazur, the Tax Policy Center’s director, said in a call with reporters that assumption was shared with the Biden campaign and the campaign didn’t object to the change.
Congress’s effort to pass stimulus legislation ahead of the Nov. 3 presidential election has stalled, meaning that if Biden were to win, he would likely face pressure to pass a large deficit-financed economic relief package during his first days in office. That could push any action on taxes well into 2021 or later.
Revenue Sources
Biden’s plan would generate $758.1 billion from higher income and payroll taxes on those earning at least $400,000, according to the estimates. About $1.4 trillion would come from higher taxes on businesses, including raising the corporate tax rate to 28% and increasing taxes on foreign profits. About $218.2 billion would come from higher estate taxes.
The plan also includes several tax credits for households and businesses. Biden’s plan would include $240 billion for a temporary expansion of the child tax credit and $210 billion for a tax incentive for first-time homebuyers. It also would create a $230 billion tax credit for companies that onshore jobs to the U.S. and invest in manufacturing.
The estimates project that the middle 20% of earners would see their federal tax bills decrease by $620 in 2022. The top 1%, roughly those earning at least $710,000 in income, would pay $265,640 more on average.
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