High earners in New York City and California could face a tax rate of up to 62% under Joseph R. Biden’s tax plan, CNBC reported Monday.
While the Democratic presidential nominee has promised to cut taxes for Americans earning less than $400,000, top earners in places such as California could face a state and federal tax rate of as much as 62.6% under his plan, Jared Walczak of the D.C.-based Tax Foundation told CNBC.
In New Jersey, the combined rates could be just over 60%, while in New York state they could reach 58.2%, CNBC reported. In New York City, the combined city, state and federal income tax rate would be just over 62%, the report said.
“These rates would be the highest in about three and a half decades,” Mr. Walzcak said, “and imposed on a broader tax base than was in place previously.”
The Biden campaign said what matters to taxpayers and the economy are the effective tax rates, which are what taxpayers really end up paying after including deductions, credits, offsets, and loopholes, CNBC reported. So even though the top U.S. statutory tax rate is currently 37%, the effective rate is reportedly 26.8%.
“Under Mr. Biden’s plan, the effective tax rate for the top 1% would increase from 26.8% to 39.8%, according to the Tax Policy Center,” CNBC reported. “That means top earners in California and New York City would pay effective state and federal tax rates of around 53% — compared with the roughly 40% they pay in effective rates today.”
CNBC reported earlier this month that Mr. Biden’s plan would most significantly impact those making more than $1 million per year and that those earning slightly more than $400,000 would only see small increases.
• Jessica Chasmar can be reached at jchasmar@washingtontimes.com.
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