A new analysis by Senate Republicans shows that President Biden’s tax plan will bring the “highest peacetime tax increase” as a percent of the GDP. It will also be the “single largest in over 50 years.”
Not since 1966 and funding the Vietnam war has the country seen a tax hike that was higher. Republicans used data from the University of Pennsylvania Wharton School Budget Model to reach their conclusions about the size of the potential tax increase under Biden.
According to a cable news report, a senior Senate GOP aide stated, “President Biden’s reckless tax and spending spree would crush the still-recovering economy with the largest single tax hike in 50 years. Americans cannot afford President Biden’s socialist agenda.”
As part of his administration’s “Build Back Better” agenda, Biden is calling for a slew of new taxes on top-earning U.S. households and corporations.
This massive tax hike includes almost doubling the top capital gains tax rate to 39.6% from 21%, raising the corporate tax rate to 28%, and returning the top individual tax rate to 39.6% from 37% while taxing capital gains upon death.
Recently, House Democrats tamped down the more far-reaching elements of Biden’s original proposed tax plan by reducing the corporate tax rate to 26.5% while only applying the rate to companies earning more than $5 million in taxable income.
Under the House plan, the tax rate would decline to 18% for smaller businesses earning less than $400,000. Other companies would continue to pay the current tax rate of 21%.
Additionally, Democrats in the House also weakened the president’s push to tax long-term capital gains as ordinary income for individuals who earn more than $1 million.
They also pushed the top rate incrementally to 25% instead of the administration’s top rate on capital gains to 39.6%. Long-term capital gains, which are generally classified as an asset held more than one year, currently are taxed in a range from 0% to 20% based upon a person’s income.
Wealthier investors are also subject to another 3.8% tax on both short-and-long-term capital gains. These funds are used to pay for ObamaCare.
Scaling back
Democrats are left with less money after scaling back the size of tax hikes. The president’s planned massive expansion of universal pre-kindergarten, paid family leaves, tax credits, free community college, and growth of the social safety net paid family leave and tax credits for low- and middle-income households will have to be scaled back.
While Democrats made adjustments to the tax numbers, Senate Republicans, citing analysis done by the Joint Committee on Taxation, decried tax increases on Americans making as little as $10,000 under the Democrats’ tax package.
Biden had pledged not to raise taxes on any one earning less than $400,000.
“In 2023, the following Americans will pay more in taxes under Biden’s plan,” the Republicans said, listing “the 5% of Americans who make between less than $10,000 and $40,000; 5% of Americans who make between $40,000 and $50,000; 9% of Americans who make between $50,000 and $75,000; 18% of Americans who make between $75,000 and $100,000; 35% of Americans who make between $100,000 and $200,000; and 59% of Americans who make between $200,000 and $500,000.”
