Biden’s social welfare bill estimated to raise taxes 30% on middle class, cut them for millionaires

From Washington Times.com (Nov. 12, 2021):

President Biden’s mammoth social welfare and climate change bill is poised to raise taxes on the middle class, while giving lucrative breaks for the superwealthy, according to a new study.

Nearly 30% of lower- and middle-class households would pay more in taxes starting next year if the bill were to become law, according to the study by the liberal-leaning Tax Policy Center, a project of the Brookings Institution and the Urban Institute. The report is an in-depth analysis of the tax increases that House Democrats want to see included in the multitrillion-dollar legislation.

It is one of several new analyses casting doubts on the ability of the planned tax hikes to meet Mr. Biden‘s goals of sparing the middle class and the superrich from dodging taxes.

Although Mr. Biden‘s tax increases start small, they grow massively by the end of the decade.

Meanwhile, two-thirds of millionaires would see tax cuts if the cap on the state and local deduction, or SALT, is raised from $10,000 to $80,000, the report found.

“Analyzing the House Democrats’ plan is especially complicated because the effective dates of its many tax provisions vary widely,” said Howard Gleckman, a senior fellow at the Tax Policy Center.

Mr. Biden and House Democrats have proposed a wide array of new taxes, spanning from Wall Street to Main Street, to pay for the social welfare package. The proposals amount to one of the most extensive tax hikes in recent history.

The White House has sought to characterize the hikes as targeting only the superwealthy and corporations to the benefit of everyone else.

“We need to build America from the bottom up and the middle out, not from the top down with the trickle-down economics that’s always failed us,” Mr. Biden said. “All I’m asking is, pay your fair share.”

The Tax Policy Center’s study blows a hole in that narrative, however. It indicates that tax proposals championed by House Democrats break a key pledge Mr. Biden made on the 2020 campaign trail: not to raise taxes on households making below $400,000 annually.

The White House did not immediately respond to requests for comment.

The Tax Policy Center’s report comes on the heels of another new analysis by the libertarian Cato Institute that warned the plethora of new taxes would complicate the tax code, making tax avoidance easier for the superwealthy.

“The Democrats want to increase IRS enforcement to reduce the tax gap, but their tax plan would increase tax code complexity resulting in the opposite,” said Chris Edwards, director of tax policy studies at Cato. “Tax code complexity increases tax avoidance and evasion by making IRS administration more difficult and by prompting taxpayers to combine disparate provisions in unexpected ways.”

Further complicating matters are the hundreds of new tax credits, a variety of things such as health care and green energy, Democrats are planning to include in the bill. [read more]