Joe Biden will make America’s tax system much fairer by increasing taxes on the rich and corporations and using that revenue to support working families, improve public services and make new investments to build an economy that works better for everyone. Though more aggressive reforms to the tax code would lead to even more equitable results and greater revenue, Biden’s proposals are a major step forward.
Revenue Raised: $2.1 Trillion Over 9 Years
- Overall, corporations and the wealthy will contribute $3.3 trillion in new revenue over 9 years ($2.6 trillion not counting Social Security). The $1.2 trillion cost of tax credits for working families, domestic manufacturers and green energy drops the net revenue gain to $2.1 trillion, per the Tax Policy Center (TPC).
- 65% of net revenue will come from corporations and businesses and 40% from the wealthy.
Wealthy Would Pay Almost All the New Taxes Under Biden’s Plan
- Three-quarters (77%) will be paid by the top 1% (household income over $858,500 in 2030)
- One half will be paid by the top 0.1% (income over $4 million in 2030)
- Biden’s plan will not directly tax households making under $400,000 a year. [PolitiFact, org, Washington Post Fact Checker]
Key Features of Biden’s Tax Reforms
- Corporate & Business Taxes: Repeals the most egregious tax breaks in the 2017 Trump-GOP tax law—the Tax Cuts & Jobs Act (TCJA). Biden proposes to increase the corporate tax rate from 21% to 28% and to enact measures to reduce outsourcing and create jobs here at home and reduce profit shifting to dodge taxes.
- Individual Taxes: Repeals excessive giveaways to the rich in the TCJA (such as a lower top tax rate and a weakened estate tax), proposes to cap the value of itemized deductions at 28% and closes other loopholes that shield the wealthy from paying their fair share.
- Taxing Income from Wealth: Reforms how wealth and income from wealth is taxed by changing taxation of capital gains:
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- Raises for those making more than $1 million the top tax rate on gains from the sale of assets (such as stocks, businesses, and real estate) from 20% to 39.6% to match the top rate on wages and salaries.
- Closes the loophole that lets the wealthy pass valuable assets, such as stock, to their heirs without paying taxes on the increased value of those assets.
- Strengthens Social Security: Levies Social Security payroll taxes on wages above $400,000. Currently, only wages below about $138,000 a year are taxed.
- Tax Credits: Provides $500 billion to working families and caregivers and $400 billion for first-time homebuyers, retirement benefits and green energy. Provides $300 billion for domestic manufacturing, green energy and investments in low-income communities.
Wall Street Analysts Praise Biden’s Tax & Investment Plans
Analysts say Biden’s plans will create more jobs and growth than will Trump’s agenda and his “capital-gains tax hike would be ‘minor’ for stocks.”