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Millionaires would pay up under Biden's tax plans, study shows
MILLIONAIRES could see much bigger tax bills if Democrat Joe Biden is elected president in November, but levies on most households below the top income brackets would stay about the same as under President Donald Trump, an outside analysis shows.
Mr Biden's tax proposals would have the top 0.1 per cent of earners - those currently making about US$3.3 million or more annually - paying a 43 per cent rate on their income, according to the Penn Wharton Budget Model.
That top group pays a rate of about 30.6 per cent under Mr Trump's 2017 tax law, according to the report, which accounts for income, payroll and corporate duties.
The figures highlight the key dividing line between the two candidates when it comes to taxes.
The Trump campaign has run ads saying Mr Biden's increases would crush middle-class families, but the data show there would be little effect for most who earn less than US$400,000. Mr Trump has said he wants to cut taxes again, but hasn't released a plan on how he would do that.
Mr Biden's platform would increase the top rate to 39.6 per cent, where it was before Mr Trump's overhaul pared it to 37 per cent. The Democrat would also tax capital gains earnings the same as regular income for top earners, and impose an additional payroll levy on incomes above US$400,000. Payroll taxes are currently only paid on the first US$137,700 of income.
About 80 per cent of Mr Biden's increases would fall on the top one per cent of earners, or those earning at least US$710,000, according to the report.
The biggest tax increases in the Biden plan are the corporate tax at US$1.4 trillion over the 10-year budget window, followed by the payroll tax at US$992.8 billion and the individual income tax at US$944 billion, according to the study.
Mr Biden would do little to tinker with the tax obligations of those earning less than US$400,000 a year. Middle-income households would see slightly higher rates due to indirect effects of higher corporate taxes. For example, the middle 20 per cent of earners, who now pay an effective tax rate of 16.9 per cent, would owe 17.3 per cent under Mr Biden.
"There is a tax increase on the lower earners, but it's small and it's through those indirect tax effects," said Richard Prisinzano, director of policy analysis at the Penn Wharton Budget Model.
Proposed tax rates under Mr Biden's plans are far lower than some touted by more progressive Democrats.
Senator Bernie Sanders, who battled Mr Biden for the party's nomination before endorsing him, proposed rates as high as 97.5 per cent on some of the richest Americans. Representative Alexandria Ocasio-Cortez of New York has called for taxing income above US$10 million at 70 per cent.
Mr Biden's plans would raise US$3.4 trillion over the next decade, or some US$2 trillion dollars short of covering the US$5.4 trillion price tag for his spending programmes, the analysis showed.
But after accounting for the macroeconomic effects of his immigration, infrastructure, health and other proposals, federal debt would decrease by 6.1 per cent and gross domestic product would rise by 0.8 per cent by 2050 relative to current law, according to the report.
The Penn Wharton Budget Model is a nonpartisan, research-based initiative that provides economic analysis of the fiscal impact of public policy, according to its website. The group describes its goal as "providing rigorous analysis without policy advocacy". BLOOMBERG