You may recall, back in 2019 and the early days of 2020 when the U.S. economy was humming like a well-oiled engine. The Trump tax cuts of 2017 propelled America’s economy forward in ways it hadn’t experienced since the 2008 financial collapse. Now that COVID is mostly over, the economy is trying hard to come back, but Joe Biden is eager to put a lid on all that growth by raising taxes up to the highest rates in the developed world. Fox News’ Megan Henney reports:
The U.S. would have the highest personal income tax rate in the developed world under the newest White House proposal that would dramatically raise the rates paid by well-off Americans.
The budget blueprint that President Biden unveiled last week includes several tax hikes on the ultra-wealthy and corporations that would push the top U.S. rates on both individual and corporate income to the highest level in the developed world, according to a new analysis published by the nonpartisan Tax Foundation.
The Biden team’s proposal would raise the average top tax rate on personal income to 57.4%, the steepest rate in the 38-member Organization for Economic Co-operation and Development.
The president laid out a series of tax increases including a “Billionaire Minimum Income Tax” that would establish a 20% minimum tax on all U.S. households worth more than $100 million, or about 0.01% of Americans.
Under the proposal, the top sliver of U.S. households would be required to pay a tax rate of at least 20% on their full income, or the combination of wage income and whatever they made in unrealized gains. If a billionaire is not paying 20% on their income, they will owe a “top-up payment” that makes up the difference to meet the new minimum.
The White House projected that more than half the revenue generated by the tax would stem from the country’s 700 billionaires.
Night falls at the Capitol in Washington, Thursday, Dec. 2, 2021, with the deadline to fund the government approaching. ( AP Photo/J. Scott Applewhite / AP Newsroom)
Biden also proposed raising the corporate tax rate to 28% from 21% as part of his budget request and pitched a global minimum tax that’s designed to crack down on offshore tax havens. Arizona Sen. Kyrsten Sinema has previously said that she will not support a corporate tax increase.
On top of that, the top marginal tax rate on ordinary income is already scheduled to increase from 37% to 39.6% in 2026 when parts of Republicans’ 2017 tax law expire. Biden’s budget also assumes that his massive spending bill – the Build Back Better plan – becomes law.
That plan included a slew of tax hikes including a 5% surcharge on modified adjusted gross income (MAGI) above $10 million, plus a 3% charge on MAGI above $25 million, for a total increase of 8% – which is equivalent to about a 9.1% tax rate on taxable income, the analysis shows.
Action Line: It’s hard to plan for retirement when your tax rate keeps changing. Inconsistent policies that veer off course at the whim of a politician make life hard on American savers. Stick with me to stay focused on your goals of saving and preparing for retirement by clicking here to subscribe to my free monthly Survive & Thrive letter. I’ll help you get serious about achieving your goals.