Joe Biden wants to increase taxes for those earning in excess of $400,000, as he aims at increasing the tax revenue for the U.S. federal government.
Biden’s plan seeks to raise $4 trillion in tax revenues over a decade. His proposed increases are more than Hillary Clinton’s in 2016, but they are heavily concentrated on corporations and the nation’s highest earners at about 39.6% from 37%, according to the Tax Policy Center. On August 23, he pledged not to raise taxes on people making less than $400,000 but defended a plan to raise taxes on the wealthier Americans as “smart.”
ABC's David Muir interviewed Biden and Sen. Kamala Harris a day after Biden accepted the Democratic nomination for President. In this interview, Biden addressed the attacks by the Trump Campaign that he would raise taxes only on those Americans making more than $400,000.
Biden also pledged that there would be no new taxes on Americans making under $400,000 a year, which he believes are the 90% of businesses in the country who run as a mom and pop businesses employing less than 50 people.
However, Politico reporter Sam Mintz argued that the “ambiguous phrasing” of Biden’s statement makes it hard to tell what exactly this means, bringing up the question of increases to existing taxes like the gas tax.
A Tax Foundation analysis claims that Biden’s proposed tax plan would lead to lower after-tax income for all income levels, while a Trump campaign staffer Abigail Marone tweeted that Biden’s proposal to reinstate the Affordable Care Act’s individual mandate is a tax that would target low & middle-income Americans.
According to CNBC, he is looking to increase payroll tax by applying the 12.4% portion of the Social Security tax — which is normally shared by both the employee and employer — to earnings over $400,000, the Tax Policy Center found. Currently, the Social Security tax is subject to a wage cap of $137,700 and is adjusted annually.
Finally, Biden would also boost rates on long-term capital gains and qualified dividends to 39.6% — the same top rate as ordinary income — for those with income over $1 million, according to the Tax Foundation. Currently, the long-term capital gains tax rate is 20% for single households with more than $441,451 in taxable income ($496,601 for married-filing-jointly) in 2020.
Biden has set his sights on the “step-up in basis,” a provision in the tax code that allows an individual to hold onto an asset for years, watch it appreciate and then bequeath it to an heir at death. The owner’s basis — the original investment in the asset — steps up to the market value at death, which means the heir is subject to little to no capital gains taxes if he sells it.