Joe Biden’s economic plan proposes:
- Stimulus checks
- $8,000 tax credit for parents with childcare expenses
- Increased unemployment benefits
- Covering health insurance for the unemployed
- A tax credit up to $15,000 for new homebuyers
- Assistance for state and local governments
- Restoration of electric vehicle tax credits
- Green energy tax credits
- Renters tax credit
These programs would be funded by raising taxes.
These would be the tax changes:
Raising Taxes on the Highest Income Earners
The top marginal tax bracket is currently 37%. Biden would increase the top marginal tax bracket to 39.6%.
Raising Capital Gains Taxes on People who Make More than $1,000,000
Currently, the highest tax rate for long-term capital gains is 20%. This is a more favorable rate than the highest ordinary tax rate of 37%. However, Biden proposes increasing the long-term capital gains tax rate 39.6%.
Eliminating Loopholes in Estate Taxes
When people pass away, the heirs inherit assets with favorable tax advantages. Biden would close these loopholes.
Limited Itemized Deductions
Itemized deductions would be limited to 28%. This is intended to only affect higher income earners. For example, if you are in the 37% marginal tax bracket, then a $100 tax deduction would save you $37. However, in this proposal, that same $100 tax deduction would be limited to saving you $28. Again, this would only affect people in marginal tax brackets greater than 28%.
Limitation on Qualified Business Income Deduction
The Qualified Business Income Deduction (QBI deduction) for small business owners and self-employed people would only be allowed for those people making less than $400,000.
Charging High Income Earners Social Security Taxes
After you make a certain amount of income ($137,700 in 2020, changes for inflation each year), you are no longer charged social security taxes. This proposal from Biden would make sure that people making over $400,00 would continue to be charged social security taxes. The people making $137,700 - $400,000 would be exempt and would not be charged social security taxes.
Corporations would be paying more taxes
Corporations would be subject to higher income taxes increasing from 21% to 28%. There would also be the elimination of many corporate tax loopholes to ensure that a minimum percentage of taxes are paid on profits for 15%. This would be similar to an alternative minimum tax (AMT).
We hope this helps give more insight on Joe Biden’s proposals and how they will be funded. If you found this information helpful, please be sure to share it with your friends and family.