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
Nonpartisan tax groups and critics of President Donald Trump alike have rebuked a repeated claim by Ronna McDaniel, chair of the Republican National Committee, that Joe Biden intends to raise taxes on “82 percent of Americans.”
McDaniel’s false claim Sunday prompted Biden staff and supporters to highlight that Biden’s proposed tax plan promises never to raise taxes on any American who makes less than $400,000 per year. McDaniel shared on Twitter a Sunday interview in which Biden campaign co-chairman Rep. Cedric Richmond reiterated that middle-class Americans will not be hit with new taxes. McDaniel dismissed Richmond’s statement and instead pointed toward
“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
For people who want to lowball their taxes, it helps to own a business. That can offer strategies for reducing what you owe Uncle Sam—and make you far harder to audit.
This has long been the case, but it’s in the news again in a big way for President Donald Trump, and a far smaller one for his opponent, former Vice President Joe Biden.
The tax spotlight is on Mr. Trump because the
New York Times
recently reported that it has obtained and analyzed years of his tax-return data despite his refusal to release it. The Times raised questions about his tax compliance, and Mr. Trump derided its reporting but provided no details. The Times’s report hasn’t been independently verified.
Mr. Biden, who has released years of returns, has been called out for employing a tax move the Obama administration wanted to end. In 2017 and 2018 he avoided as
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