"For those looking to see if Biden kept his promise to not raise taxes for those making $400,000 or less, the answer is: mostly, but not entirely," explained Tax Policy Center senior fellow Howard Gleckman. "Including corporate tax increases, most households would pay more in 2022. About three-quarters of middle-income households would face a tax increase averaging about $300. But nearly all would be a result of those higher corporate taxes."
Biden vowed throughout the 2020 campaign not to raise taxes on people earning less than $400,000, though the analysis confers the majority would see at least some raised taxes from his proposals. About three-quarters of households making between $75,000 and $100,000 would see their burden rise about $440, while 69% of those earning between $100,000 and $200,000 would witness a raise of $830 on average.
The enhanced tax burden proceeds to rise the more a household makes, with 83.7% of households in the $200,000-$500,000 bracket seeing an increase averaging $2,040. The heaviest weight falls on those making more than $500,000, with 99.8% of those between $500,000-$1 million seeing an increase of $8,810 and those earning more than $1 million seeing an average increase of $265,939.
Biden’s proposed tax increases cover raising the corporate rate from 21% to 28% and the capital gains rate from 21% to 39.6%. The president has further called for raising the country's top rate back to 39.6% from 37%.
Biden’s budget proposes making single individuals earning over $452,700 subject to the top rate, while married couples making more than $509,300 would likewise be subject to it. Heads of households earning more than $481,000 would be subject to the top rate as well, along with married individuals filing separately that make over $254,650.
Biden’s proposal does not call for a direct tax rise for those making less than $400,000, though the analysis discovered that many low- and middle-income people would see a greater burden indirectly as a result of lower compensation and investment earnings stemming from the corporate tax hike.
Yet some of the losses for low- and middle-income households could be made up by increased tax credits in Biden’s plan, including the proposed expansion of the child tax credit. When factoring in those credits, a household earning between $100,000 and $200,000 would see its overall tax burden shrink by $110. Households earning between $75,000 and $100,000 would pay roughly $240 less, while those making between $50,000-$75,000 could save an average of $540.
Biden’s proposed tax hikes are meant to pay for his plan to increase government spending on education, child care, and paid family leave. The plan, which calls for $1 trillion in new spending and $800 billion in middle-class tax credits, has been called a “once-in-a-generation investment” in the country’s future by the Biden administration.