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Which Income Levels will be Affected by Biden’s Top Tax Rate?

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EDITOR NOTE: If you’re among the wealthiest of Americans, making $552,700 or more annually, President Biden is proposing to raise your tax rate to 39.6%--closing in on almost half of everything you earned in a year. We can assume that many of the millionaires occupying the top income levels of wealth have benefited from the Federal Reserve’s policy-driven asset bubbles. It may appear to be something of a reckoning for those who have. Still, for every dollar the government takes back from this benefit in the form of higher taxes, there’s very little said about the money taken through the “hidden tax” of monetary debasement. The national debt has to be paid one way or another, though sadly, the Biden administration sees no end to the rampant spending which further claims Americans’ future income and wealth. A vicious cycle, one affecting every American, rich and poor. Taxing the wealthy smacks of a liberal “virtue signaling” that distracts public awareness from the damage fiscal policy is doing to all taxpayers in the country.

President Joe Biden wants to raise the top income tax rate for wealthy households to 39.6%, from the current 37%, to help finance his legislative agenda.

That top rate would apply to single individuals with taxable income of more than $452,700 and married couples filing a joint tax return with income over $509,300, according to a budget proposal issued Friday by the Treasury Department.

It would also apply to heads of household with income exceeding $481,000 and married individuals filing separate tax returns with income over $254,650.

Those income thresholds are lower than under current law, set by the 2017 Tax Cuts and Jobs Act.

Income Levels

(By comparison, the 37% top individual rate applies to income exceeding: $523,600 for single filers and heads of household, $628,300 for married joint filers, and $314,150 for married separate filers.)

The 39.6% top rate would kick in during the 2022 tax year, according to the proposal. (That means it would apply to tax returns filed in 2023.) Congress would still need to pass legislation enacting the policy, which isn’t assured.

Biden’s proposal is one of several measures aimed at raising taxes on households earning more than $400,000 a year.

The tax revenue would help finance initiatives in the American Families Plan to expand the social safety net, including funding for four additional years of free schooling, heavily subsidized child care for middle-class families, federal paid family leave and expanded child tax credits.

Hiking the top rate to 39.6% would raise an estimated $132 billion over five years, according to the Treasury Department.

The top rate is slated to increase even if Congress doesn’t pass Biden’s proposal. The Tax Cuts and Jobs Act’s individual tax reductions will lapse after 2025 due to how Congress structured the law.

Biden’s proposed income thresholds for the 39.6% rate correspond to the pre-TCJA thresholds, indexed for inflation, according to a Treasury official.

Original post from CNBC

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