President Donald Trump participated in a town hall hosted by Savannah Guthrie of NBC News on October 15 in Florida. He claimed that Biden wants to raise taxes on “everybody” including “middle income” people. This is false. Joe Biden has vowed he won’t raise federal income taxes on anyone making under $400,000 a year.
As we’ve explained before, Biden’s tax plan would not directly increase federal income taxes on anyone making less than $400,000 a year. But it would also raise corporate income taxes — which experts generally agree would have the indirect effect of holding down wages.
However, Biden has also proposed a number of new tax credits for low- and middle-income earners. And those would offset even the indirect effect of increased corporate taxes. The most recent estimate (issued Oct. 15) by the Urban-Brookings Tax Policy Center, for example, calculates that the net result of all Biden’s tax proposals would be, on average, an increase in after-tax income (in effect, a tax cut) for the bottom 80% of households, with the top one-tenth of 1% of earners bearing 70% of Biden’s proposed tax increases.
The business-supported Tax Foundation comes to a similar conclusion in its latest study, figuring that the middle 20% of earners would see a 1.4% increase in after-tax income in 2021. (However, the Tax Foundation also figures that the dynamic effects of Biden’s tax proposals would eventually — over the long run — hold down economic growth by 1.5% and result in a 1.2% reduction in after-tax income for that middle quintile.)
