When President Biden earlier this month released his budget for the next fiscal year, his priorities included raising trillions of dollars in taxes to help reduce the federal deficit by nearly $3 trillion over the next decade.
Now, the Tax Policy Center has analyzed the budget and estimated the impact on American taxpayers based on their income. Some low-income Americans could end up benefiting, while the wealthiest households could experience a significant increase in their tax burden, the think tank said.
To be sure, Mr. Biden’s budget is not set in stone — instead, it represents a starting point for negotiations with lawmakers who will ultimately craft and pass spending bills and new tax laws. But the White House’s push to raise taxes on the wealthy reflects a desire to place more of the burden on the wealthiest Americans to increase funding for education, housing and health care, among other priorities.
“As Biden has made clear since his 2020 campaign, he wants to raise taxes significantly for high-income households and corporations and provide modest tax cuts for low- and middle-income households,” wrote Howard Gleckman, a senior fellow at the Tax Policy Center. in blog post. “And whether you like it or not, that’s what his budget does.”
According to the analysis, many middle-class families would see no change in their after-tax income under Biden’s proposed budget.
The biggest increase in taxes for high-income families is linked to the Biden administration’s proposal to raise the top capital gains tax rate from 20% to 39.6%, the Tax Policy Center noted.
The proposed budget also includes a 20% minimum tax on people with more than $100 million in wealth, but the Tax Policy Center notes that this would affect only about 20,000 US households. However, the impact “would be significant,” it noted.
The group noted that low-income households would benefit from the proposed expansion of the Child Tax Credit and Earned Income Tax Credit.
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