Taxes are a major issue for virtually every presidential candidate. People campaign on tax plans and Americans often listen. Roughly 70 percent of voters consider taxes to be “very” or “extremely important” in which candidate they support, according to Gallup.
With the presidential election only a few months away, former Vice President Joe Biden has a sizeable lead over President Donald Trump. Although a lot can change before November, Biden is in a good position to win the election. With that in mind, it’s a good time to take a look at his tax plan. Here’s how a Biden presidency would change your taxes (if at all).
Breaking Down Biden’s Tax Plan
U.S. tax code is extremely complicated, and often that complexity is countered with oversimplified explanations of politicians’ tax plans. For instance, you’ve probably heard that Biden wants to raise taxes, which is true. Biden’s major proposed tax changes would slightly raise taxes on individuals earning more than $400,000 annually – about 1 percent of Americans.
Biden has also proposed a number of tax changes for businesses and corporations, which would impact the economy differently. In general, however, simply “raising taxes” means very little without getting into the details of who should expect to pay more.
Tax Changes for Individuals
- Individuals in the top tax bracket (earning $400,000 or more annually) would see an increase in income tax from 37 percent to 39.6 percent, the level it was before Trump’s 2017 tax breaks
- Capital gains of more than $1 million would be taxed as standard income, at 39.6 percent
- Increase Social Security revenue by introducing a 12.4 percent payroll tax on wages above $400,000 per year
- Provides tax credits linked to sustainable energy
- Overall, the top 1 percent of earners would bring in 13 to 18 percent less income after tax, every other American would lose 0.4 to 0.6 percent more to taxes
Tax Changes for Businesses
- The corporate tax rate would be raised to 28 percent, from 21 percent now
- Introduction of a minimum tax on companies’ book profits of 15 percent on companies with at least $100 million in annual income
The Bottom Line
While this isn’t a full deep dive into Biden’s tax plan, it’s a good overview of where tax rates are expected to change. For a more in-depth look at Biden’s current tax proposals, the Committee for a Responsible Federal Budget analyzed the proposed changes at length.
More policies may be introduced or scrapped before Biden takes office, should he win, and nothing is set in stone now anyway. Regardless, it’s always a good idea to have a solid sense of what politicians want to do with your money.