Grover Norquist of Americans for Tax Reforms on what taxes might look like for the average American under a Biden administration.
President-elect Joe Biden proposed this week to support the return of individual and corporate tax rates to the highs of the George W. Bush era, though his economic agenda is likely to depend on the outcome of two runoff elections in Georgia in January.
During an interview with the New York Times, Biden said that one of his top priorities, even before he enters the White House on January 20, is getting a generous coronavirus aid package from Congress. This will help generate future economic growth without long-term fiscal damage, he said, as long as "everyone pays his fair share for God".
"And by that fair share, I mean there is no reason why the top tax rate shouldn't be 39.6 percent like it was when the Bush administration began," Biden said. "There's no reason 91 should be Fortune 500 companies." Taxes pay zero. "
HOW A PROVIDED PRESIDENCE CAN CHANGE YOUR TAX INVOICE
The country's highest marginal income rate was 39.6% for Americans who earned at least $ 374,000 before Bush implemented a series of tax cuts in 2001 and 2003 – called the Bush tax cuts – and lowered the maximum rate for high earners to 35%. These cuts remained in place until 2013, when the changes in tax legislation expired.
As the economy recovered from the 2008 financial crisis, Congress and President Barack Obama decided to keep the individual tax rate at 39.6%.
The highest income tax rate remained at 39.6% until 2017, when President Trump signed the 2017 Tax Cuts and Employment Act, which lowered the corporate tax rate from 35% to 21% and the individual tax rate to 37%.
Biden has repeatedly pledged to roll back this law, restoring the corporate tax rate to 28% and raising the top income rate to 39.6% – with the caveat that taxes will not go up for Americans earning less than $ 400,000.
BIDEN'S PLAN TO OVERHAUL 401 (K) TAX BROADCASES COULD FORCE SOME COMPANIES TO CUT THESE PENSION ADVANTAGES
"I will collect taxes on anyone who earns more than $ 400,000," Biden promised during his campaign. “Let me tell you why I'm going to do it. It is time they paid a fair share of our economic responsibility. The very rich should pay a fair share – companies should pay a fair share. "
However, some of the former vice president's proposals could indirectly hit middle-class Americans, according to Taylor LaJoie, policy analyst with the Tax Foundation.
"When Biden says he will only levy taxes on those who earn more than $ 400,000, he is saying that his tax law will only target those high-income taxpayers," LaJoie wrote. "However, economists track the economic impact of these taxes on who wrote the check."
For example, increasing taxes on companies hurts workers in the form of lower wages, according to the Tax Foundation, a center-right think tank based in Washington, DC.
SOME PENSIONS COULD INCREASE 5% SOCIAL SECURITY WITH BIDEN AS PRESIDENT
A study published by the American Enterprise Institute, a conservative think tank, found that a 1% increase in corporate tax rates correlated with a 0.5% decrease in real wages. And in 2007, the Impartial Budget Bureau of Congress found that workers pay more than 70% of the cost of corporate taxes.
The Constitution ultimately gives Congress the power to determine tax policy. Therefore, Biden's economic agenda depends on whether Democratic candidates Raphael Warnock and Jon Ossoff win their respective races against Georgia Sens. Kelly Loeffler and David Perdue on Jan.
If they win, the Democrats would secure a 50:50 split and Vice President-elect Kamala Harris could cast a groundbreaking vote.
Nearly 80% of Biden-sponsored tax increases would end up in the top 1% of the US workforce, according to a projection by the Penn Wharton Budget Model, a non-partisan group at the University of Pennsylvania's Wharton School.
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