Democratic presidential candidate Joe Biden’s proposed tax increases have shrunk, according to a new analysis, falling by almost half, to about $2.4 trillion.
That’s because while he initially focused on raising taxes on businesses and rich people, in recent months Biden has leavened his plans with tax cuts aimed at people further down the income ladder.
That has dragged down the net size of Biden’s tax increases, the Washington-based Tax Policy Center says, from the $4 trillion it had initially estimated in March.
“The Biden campaign has made a number of additional tax proposals since then — hence today’s update,” said Mark Mazur, the head of the group.
The downward revision comes as Republicans have hammered Biden’s plans to raise taxes.
Mazur was a top tax official in the Obama administration. The group’s findings are generally in line with those of other organizations, such as the conservative-leaning American Enterprise Institute, which earlier this week estimated Biden would raise taxes by $2.8 trillion.
The Tax Policy Center is working on an estimate of President Donald Trump’s so far much more thinly drawn tax agenda.
Biden has offered more than 50 tax proposals, many of which are reminiscent of what Biden pushed as part of President Barack Obama’s administration.
About 60 percent of Biden’s tax increases would come at the expense of businesses, according to TPC, with the other 40 percent hitting wealthy individuals. People in the top 1 percent of taxpayers, earning at least $788,000, would pay on average $266,000 more per year under the plan, the group predicts.
At the same time, Biden has proposed $1.2 trillion in tax cuts, including a major, though temporary, increase in the popular child tax credit. He would boost the credit to as much as $3,600 per child from the current $2,000 while making it fully refundable, which means that if it completely offset someone’s tax bill they could get a check from the government for the difference.
He’s also proposing creating a new $15,000 first-time homebuyer tax credit; expanding a credit for dependent care to $8,000 from the current $2,100 for two kids; and creating a new credit for contributions to retirement accounts.
That would mostly ensure middle-income people would not pay more under his plan, TPC says — a priority for Biden. President Donald Trump has challenged Biden’s assertion, saying his plan would boost taxes across the board.
But in the long run, the analysis says, middle-income people would see their taxes go up slightly. That’s because Biden’s expansion of the child tax credit is temporary.
At the same time, TPC assumes, like many budget analysts, that workers bear some of the burden of raising corporate income taxes — Biden would hike the corporate rate to 28 percent from the current 21 percent.
So the group predicts people in the middle of the income spectrum would initially see a $620 tax cut under the plan, but by 2030 they would pay $70 more.
There is some dispute over whether Biden is calling for the repeal of a new $10,000 cap on state and local tax deductions — a hot button issue for Democrats because it hits blue states the hardest; yet, repealing the limit would mostly benefit the rich.
The American Enterprise Institute included that repeal in its estimate of Biden’s plan, pointing to news reports the former vice president wants to kill the cap. Kyle Pomerleau, the author of the AEI study, said he ran his assumptions about how Biden’s plan would work by the campaign before releasing it.
But the Tax Policy Center says it did not see any direct evidence that Biden supports repeal.
“There’s no reference to replacing that limit on their campaign Web site or directly attributable to the campaign, said TPC’s Gordon Mermin. “We couldn’t find any direct statements from the campaign saying they were going to repeal the limit.”
Mermin also said they told the Biden campaign about the analysts’ presumptions and it did not object.
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