California senator and Democratic vice-presidential nominee Kamala Harris has repeatedly assured the American public that former Vice President Joe Biden will not raise taxes on the middle class if he is elected to office. However, she has also stated that “[o]n day one, Joe Biden will repeal the [Trump] tax bill; he’ll get rid of it.” This plan contradicts her promises, as President Donald Trump’s tax bill codified middle-class tax rates lower than what Biden proposes.
Under the Trump Tax Cuts and Jobs Act, middle-class Americans have seen significant reductions in federal income taxes. In 2017, the average income tax rate for the American middle class was reduced by 1.8%. Repealing the Trump tax plan means the middle-class tax rate will rise back to the original rate.
A study by the Committee for a Responsible Federal Budget states that “[s]ince Biden’s proposed tax increases would raise less than $4 trillion, on net, substantial new revenue and spending cuts would likely be needed. This new revenue could potentially come from taxes on the middle class.” Some of the Biden campaign’s costly promises include an expansion of the Affordable Care Act and the Biden environmental plan, which is estimated to cost $1.5 trillion and $2 trillion, respectively.
However, Biden’s tax plan will not directly increase taxes by a net of $4 trillion. Instead, Biden will increase taxes on corporations from 21% to 28% and indirectly raise taxes for the middle class. According to the Tax Policy Center, “60 percent of the corporate tax is borne by shareholders, 20 percent is borne by capital owners, and 20 percent is borne by labor.” The second, middle, and fourth quintiles (commonly called the middle and working class) will take indirect hits from the Biden tax plan along with all income groups in America.
Biden’s tax plan does nothing to current income tax brackets except to raise the top bracket from 37% to 39.6%. This bracket affects income higher than around $520,000 – far beyond “middle class”. By significantly raising the maximum tax credit for dependents, Biden’s tax plan is essentially a tax cut for the middle class.
As for the argument about corporate taxes, this amounts to “well, taxes have ripple effects, so a tax on corporations is actually a tax on the middle class”. If this argument were coherent, we would have seen the alleged benefits of the TCJA “trickle down” already. They have not, and will not; tax cuts for corporations do not trickle down, and cause massive budget deficits.
The evidence presented is not convincing IMO. In fact from reading as much as I can on what Biden plans to do tax wise, I have trouble reconciling them with this article at all. Here is a link to the changes:
As noted by the previous commenter, the impact on middle-class income households is small. Although if anything maybe net positive with the CTC and CDCTC as well as the first time homebuyers credit.
If you make over $400,000 or have a multimillion dollar estate to pass on then you’ll be impacted, but normal family making less than that is going to likely be better off.