With the U.S. presidential election only a few weeks away, it’s timely to evaluate the details of Joe Biden’s tax plan, the potential implications and some strategies that might be worth considering.
Before we begin, it’s worth noting that even if Biden is elected, his tax plan becoming a reality would likely hinge on Democrats also gaining control of the Senate this November. And, even if that occurs, it could prove difficult to increase taxes if the 2021 economy is still fragile due to COVID-19. With that said, it is prudent to understand what the tax implications might be so we can evaluate which planning strategies could be beneficial in advance.
Income Tax Impacts
If you earn more than $400,000 per year, Biden’s income tax plan would negatively impact you in several ways:
Under Biden’s plan, the top tax bracket, which is currently $622,051 for married couples filing jointly
Using the Tax-Calculator (3.0.0) microsimulation
model, we estimate that Joe Biden’s proposals would raise federal revenue by
$2.8 trillion over the next decade (2021–30).
The majority of new federal revenue would come
from businesses and corporations ($1.9 trillion). The remaining revenue would
come from individual income and payroll tax increases ($616.8 billion) and an
increase in estate and gift taxes ($276.4 billion).
In 2021, Biden’s proposals would increase taxes,
on average, for the top 5 percent of households and reduce taxes on households
in the bottom 95 percent. In 2030, Biden’s proposals would increase taxes, on
average, for households at every income level, but tax increases would
primarily fall on the top 1 percent of income earners.
Using the open-source OG-USA (0.6.2) model, we
estimate that Biden’s proposals would reduce gross domestic product (GDP) by
0.16 percent over the next decade, slightly increase GDP the second decade
“Every four years a Democrat runs for president on a platform that includes higher taxes for the wealthy. And every four years a group of people predicts that the sky will fall if those plans are implemented. Yet every time their plans have been implemented, the sky hasn’t fallen.” Those are the words of Harvard professor Jason Furman, who was Chairman of the White House Council of Economic Advisers during Barack Obama’s second presidential term.
Furman is right. It’s never made sense that Republicans would cry “recession” every time a Democrat would promise tax increases. This isn’t to defend tax increases. Rest assured this write-up will not.
Still, Republicans vandalize the word “recession” when they say tax cuts will automatically cause them. Painful as they are, recessions have historically signaled an economy on the mend. During boom periods, it’s only natural that lenders will reach a bit in terms of
Devon Archer, a longtime business associate of Joe Biden’s son, was convicted in June, 2018 on charges related to his involvement in a scheme to defraud a Native American tribe.
The defendants, including Archer, are accused of pressuring the Wakpamni Lake Community Association, an affiliate of the Oglala Sioux Tribe to issue $60 million in economic-development bonds which the defendants then used for their own purposes, such as investing in their own businesses instead of investing it back into the tribe.
After his conviction, a federal judge in New York overturned Archer’s conviction later that year, saying the evidence was insufficient to
Democratic presidential nominee and former vice president Joe Biden speaks at a campaign stop in Miami on Oct. 5, 2020.
Roberto Schmidt | AFP | Getty Images
Taxes could rise for the wealthiest households in a Joe Biden presidency.
However, you might want to think twice before making any dramatic moves.
Indeed, Biden’s tax plan was a topic of discussion during the debate between vice president Mike Pence and Sen. Kamala Harris, D-Calif., on Wednesday night.
The two clashed over the effectiveness of the Tax Cuts and Jobs Act — President Trump’s tax overhaul that went into effect in 2018 — and the plan Biden has drafted.
During the debate, Pence asserted that President Trump has cut taxes across the board. Though indeed the Tax Cuts and Jobs Act roughly doubled the standard deduction and reduced individual income tax rates, those provisions will end after 2025.
President Trump on tax cut plans for his second term.
If elected, Democratic presidential nominee Joe Biden would repeal President Trump’s tax cuts and raise taxes by the “largest percentage” in the country’s history, the president warned Thursday night.
“He wants to take all that away,” Trump told Fox News’ Sean Hannity during an exclusive “Hannity” phone interview with less than a month to go before Election Day.
“So therefore, if you do nothing else, you’re raising taxes by the largest percentage in the history of our country. If … he terminated my tax cuts, which is one of the reasons that our economy has done so great even now in this pandemic. … But he’s looking to do big, big tax cuts, big, big tax increases, like at a level that’s never been seen.”
Trump said Biden’s tax plans would be a “disaster” and would put the country into
Joe Biden’s economic plan is getting solid reviews, with research firms such as Oxford Economics and Moody’s Analytics predicting it would modestly booth growth and employment, if enacted.
But there’s one silly and probably unworkable idea in Biden’s plan: an alternative minimum tax on companies that use legal tax deductions to reduce their tax burden.
During a recent webinar sponsored by Yahoo Finance and the Bipartisan Policy Center, two prominent economists—Jason Furman of Harvard University and Doug Holtz-Eakin of the American Action Forum—both trashed the idea of an overlapping second tax system for businesses. Furman is a Democrat who was chair of the Council of Economic Advisers under President Obama. Holtz-Eakin is a Republican who was director of the Congressional Budget Office and chief economic adviser to John McCain during his 2008 presidential campaign.
Biden’s alternative business tax would be a new 15% tax on “book income” for companies with
The woes of H-1B visa aspirants won’t end even if Donald Trump loses the presidential elections in November.
Trump, with his aggressive anti-immigration rhetoric, is often perceived as the only force against the US long-term work visa. But, if one reads the fine print of Joe Biden’s stance on immigrant workers, it is clear that things will never go back to as good as they once were.
During his campaign, Biden has promised to be less harsh with H-1B restrictions, expand the number of available visas, and even do away with country quotas for green cards—the reason why most Indians have to wait for several decades to get one.
Biden has also said he will ensure that foreign students getting PhD degrees in science, technology,
Democratic presidential candidate Joe Biden says that if elected, he will raise taxes only on the wealthiest Americans. And indeed, analyses of his tax plan find that fewer than 2% of earners would pay more.
That’s because the nominee pegs “wealthy” at an adjusted gross income of at least $400,000 per year. Biden is proposing a marginal income tax rate increase, meaning that while it kicks in at $400,000, the more money a worker makes over that threshold, the more they’ll pay in taxes.
The plan primarily increases taxes for those earning more than $1 million a year, according to an analysis from the Tax Policy Center.
“People making between $400,000 and $700,000 are going to have a tax increase of only about 1% or less,” Seth Hanlon, senior fellow at the Center for American Progress, a left-leaning think-tank, told CNBC.
The $400,000 threshold is intentional: Biden wants to contrast