Biden is playing a risky game heading into November.
President Joe Biden has consistently assured Americans that he won’t raise taxes for those earning less than $400,000 annually. However, recent statements suggest a different trajectory, indicating potential tax hikes for a broader spectrum of earners.
The focal point of contention lies in the fate of the Tax Cuts and Jobs Act (TCJA). Biden’s proposition to let the TCJA expire could translate into significant tax increases for the middle class. While the TCJA did benefit higher-income individuals, it notably alleviated tax burdens for middle-income households by doubling the child tax credit and standard deduction while also reducing tax rates across the board.
Allowing the TCJA to sunset would reverse these benefits, halving the standard deduction and child tax credit and resulting in higher marginal tax rates for many. Notably, affluent taxpayers predominantly utilize itemized deductions rather than the standard deduction, and the child tax credit phases out for higher earners, implying that the brunt of these tax hikes would be borne by the non-wealthy.
For instance, a family of five earning $90,000 annually could witness a substantial increase in their federal income taxes, with their marginal tax rate potentially surging from 12% to 15%, and their $6,000 in tax credits dwindling to $3,000 under Biden’s plan. Consequently, their federal income tax burden could soar from approximately $350 to $2,875 annually.
While Biden’s stance could be interpreted as a means to enact a new middle-class tax cut or selectively retain favorable aspects of the TCJA, his explicit desire to let the entire act expire raises questions about his understanding of its implications. This ambiguity is compounded by past instances where Biden has either misrepresented or misunderstood the impacts of the TCJA, casting doubt on whether his statements are rooted in ignorance or deception.
In light of these inconsistencies, the broader discourse surrounding Biden’s tax policy underscores the need for clarity and precision to ensure that proposed measures align with their intended objectives without unduly burdening middle-class taxpayers.