What you should know about Biden’s tax plan
It’s unlikely that Biden’s campaign plans would come to fruition just as he’s proposed them, even if he wins the election. He’d have an easier time getting them passed if Democrats also take back the Senate and maintain control of the House.
But the story is a little different when considering indirect taxes, like the corporate tax hike Biden is proposing. Economists assume that workers eventually bear some of the cost of those taxes. They won’t see a higher income tax rate, but their after tax-wages could be lower.
Under that assumption, the Penn Wharton Budget Model still shows that higher-income earners would shoulder most of the burden. Those earning less than $400,000 would see an average decrease in after-tax income of 0.9% while those earning more would see a decrease of 17.7%.
Biden is also proposing to expand the child tax credit and to reestablish a first-time homebuyers’ tax credit.
Taxes would go up on the wealthy
Biden proposes raising the top federal tax rate from 37% to 39.6%, its pre-Trump level. This would affect those with taxable incomes above $400,000.
He would also subject earnings over $400,000 to the Social Security payroll tax, which is currently limited to $137,700 of earnings.
Business taxes would go up
Under Biden’s plan, the corporate tax rate would rise from 21% to 28%. He would also establish a 15% minimum book tax and tax increases on international profits.
It would raise between $2.4 and $4 trillion over 10 years
401(k) retirement accounts could change
Biden’s campaign proposal is vague on some key details, but here’s how it could work: The current system — which allows savers to take up to $19,500 in income-tax deductions every year — would be replaced with a flat refundable tax credit.
