The top 1% would see their federal taxes rise by more than $213,000, on average, next year as a result of President Joe Biden’s tax plan, according to an analysis published Wednesday by the Urban-Brookings Tax Policy Center.
Such households, which earn about $800,000 or more a year, would see their after-tax income fall about 11% as a result, according to the report.
Biden proposed raising taxes on wealthy Americans and corporations to pay for a multi-pronged infrastructure plan and an expansion of the social safety net that would especially benefit low- and middle-income families.
The top 0.1% — who earn at least $3.6 million — would pay an extra $1.6 million, on average. Their after-tax income would fall about 17%, according to the Tax Policy Center.
Biden’s plan would raise the top marginal income-tax rate to 39.6% from the current 37%. It would also tax the appreciation of unsold stock and other assets at death instead of letting those assets pass to many heirs tax-free.
The top tax rate on long-term capital gains would increase to a combined 43.4%, from the current 23.8%, for taxpayers with more than $1 million of annual income.
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The plan would also extend recent temporary increases to the child tax credit, the child and dependent care credit, and the earned income tax credit, enacted by the American Rescue Plan. Those benefits would largely accrue to low- and middle-income households.
The Biden plan would give low-income households (earning $26,000 or less) an average tax cut of $600 next year — raising their after-tax income about 4%, according to the Tax Policy Center.
Middle earners (who make about $52,000 to $92,000) would get a $300 tax cut, on average, or 0.5% of after-tax income, according to the analysis.
Families with kids would get a bigger tax break, however. For example, low earners with kids would see their tax cut grow by more than five times to $3,200 on average.