President Joe Biden's social spending package would raise taxes on up to 30% of middle-class families, the nonpartisan Tax Policy Center says.
Biden, during his 2020 presidential campaign, promised not to raise taxes on anyone making less than $400,000 per year.
"Taking into account all major tax provisions, roughly 20% to 30% of middle-income households would pay more in taxes in 2022," Tax Policy Center senior fellow Howard Gleckman said Thursday.
"Among those with a tax increase, low- and middle-income households would pay an additional $100 or less on average. Those making $200,000-$500,000 would pay an average of about $230 more."
A proposed increase in the deduction limit on state and local taxes — popularly known as SALT deductions — would benefit wealthy families in high-tax states such as New York and California, while providing almost no benefit to the middle class, according to the analysis.
"Despite what its promoters say, raising the cap to $80,000 would provide almost no benefit for middle-income households. It would reduce their 2021 taxes by an average of only $20," the analysis said.
"Even those making between $175,000 and $250,000 would get a tax cut of just over $400 or about 0.2 percent of after-tax income. By contrast, the higher SALT cap would boost after-tax incomes by 1.2 percent for those making between about $370,000 and $870,000 (the 95th to 99th percentile)."
The Tax Policy Center analysis, however, said the tax burden would change in 2023, when proposed expansions of the Child Tax Credit payments would end. Also, one of the major tax increases in the bill, the corporate minimum tax on book income, isn’t scheduled to take effect until 2023.
"In general, the combined effects of these changes would result in many households paying higher taxes in 2023 than in 2022," the TPC analysis said. "They would shrink the average 2023 tax cuts for low-income households, raise taxes slightly for moderate-income households, and increase taxes significantly for the highest-income households."
In 2026, all of the individual income tax provisions of the 2017 Tax Cuts and Jobs Act will have expired, and households would be affected by the bill’s proposed revisions in the state and local tax (SALT) deduction cap. There also would be significant changes in revenues collected from multinational corporations.
Biden and Democrats in Congress are eager to pass $1.75 trillion in social spending legislation. Although the legislation will pass easily in the House, the Senate will require all party approve the bill via reconciliation in a 50-50 chamber.
Moderate Sen. Joe Manchin, D-W.Va., said Wednesday that Congress "can no longer ignore" the worsening economy. The Labor Department earlier in the day announced that prices for U.S. consumers jumped 6.2% in October compared with a year earlier, as surging costs for food, gas, and housing left Americans grappling with the highest inflation rate since 1990.
© 2024 Newsmax. All rights reserved.