President Biden’s multitrillion-dollar social welfare bill breaks a key pledge from his 2020 campaign: that he would not raise taxes on individuals making less than $400,000 annually.
An analysis by the Joint Committee on Taxation released Tuesday shows that the House version of Mr. Biden’s bill starts raising taxes as early as 2023 on middle-class families.
“The analysis also documents that the Administration’s pledge that ‘no one with income below $400,000 will see their taxes go up’ is not true,” said Sen. Mike Crapo of Idaho, the top Republican on the Senate Finance Committee.
Even after all credits are taken into account, taxpayers making between $50,000 to $75,000 annually would see a 0.3% tax increase starting in 2023. For those making between $75,000 and $100,000, the tax hike would be 2.9%.
Individuals making between $100,000 and $200,000 would see a net tax hike of 7.4% in 2023.
“This analysis proves that any suggestion this bill constitutes a broad-based middle-class tax cut is clearly false,” Mr. Crapo said.
By 2031, taxpayers in the $50,000 to $75,000 would see a net 1% hike in their taxes, while those in the 75,000 to $100,000 range would see a 2.9% increase. Meanwhile, those making between $100,000 to $200,000 see an overall tax hike of 11.3%.
The tax increases that Mr. Biden is backing that will hit the less-wealthy include a provision doubling the federal tobacco tax to more than $2 per pack, new taxes on income derived from small businesses, and the closing of hundreds of various “loopholes” and deductions.
Fiscal watchdogs also say that many of the tax increases formally geared toward corporations, including a new 15% flat tax on profits, will trickle down to lower-income brackets.
The JCT results pose bad news for the president and his social welfare bill, which has stalled in Congress. It also breaks a key promise from Mr. Biden’s 2020 presidential bid.
While campaigning for the White House last year, Mr. Biden repeatedly stressed that he would not directly raise taxes on individuals making below $400,000. Instead, he claimed the tax burden would be borne entirely by those that could afford it most: the wealthy.
“Nobody making under 400,000 bucks would have their taxes raised,” Mr. Biden repeated earlier this year during an interview with CNBC. “Period. Bingo.”
The JCT analysis shatters that pledge. More troubling is that Mr. Biden’s tax increases fall heaviest on the lower and middle class, while the super-wealthy receive a generous tax cut until at least 2025.
The reality stems from a proposal Democrats have included within the bill to expand the state and local tax (SALT) deduction.
SALT allows individuals to write off a portion of their annual state and local taxes. The lucrative deduction is used by residents from predominantly Democratic coastal areas, where the state and local tax burdens are especially high.
Former President Donald Trump’s signature 2017 tax overhaul capped the deduction to $10,000 annually. House Democrats have included language in Mr. Biden’s social welfare bill raising the cap to $80,000.
The impact will disproportionately benefit higher-income taxpayers, according to the JCT, while punishing those in the lower and middle class.
For instance, starting in 2023 people making between $200,000 to $500,000 would see a 12.7% tax cut because of SALT. That same year, individuals making between $500,000 to $1 million would see a tax decrease of 35.5%.
The figures only increase in 2025, when individuals making between $500,000 to $1 million see a net tax cut of 46.4% because of SALT. People making between $50,000 to $100,000, however, continue to see an overall tax hike.
Once restoring the SALT deduction expires in 2026, taxes rise significantly on higher-income levels.
Individuals making between $100,000 and $200,000 would see a 16% rise in their taxes that year. Meanwhile, those making between $200,000 to $500,000 see a 49.3% hike. By 2031, people in the latter bracket see a tax hike of 52.4%.
Despite the disproportionate benefit SALT has for the wealthy, Mr. Biden will likely be unable to pass his social welfare bill without its inclusion.
Nearly two dozen Democrats have threatened to tank the bill without an expansion of SALT. Given that Democrats have only a narrow three-seat majority in the House and the Senate is divided 50-50, Mr. Biden cannot afford any disunity from his party.
“No SALT, no dice,” said Rep. Josh Gottheimer, New Jersey Democrat.
• Haris Alic can be reached at halic@washingtontimes.com.
Please read our comment policy before commenting.