Here’s something new to worry about when it comes to President Biden’s tax plan: It could hit you in the paycheck.
A new analysis from the Tax Policy Center shows the White House’s plan to hike the minimum rate on corporate taxes to 28 percent from the current rate of 21 percent will effectively hit the finances of lower- and middle-income taxpayers to the tune of $300 — in the form of lower wages.
Some readers may have understandably been scratching their heads on Monday when the Tax Policy Center’s report got released, as its verbiage framed the hit as an actual tax increase.
“About three-quarters of middle-income households would face a tax increase averaging about $300,” according to the paper by Howard Gleckman. “But nearly all would be a result of those higher corporate taxes.”
Reached after the report’s publication, Gleckman clarified that the $300 was actually a reference to his projections of lost compensation. In addition to companies cutting wages to offset higher tax bills, Gleckman predicts that anyone with a 401K will likely see their net worth shrink as the tax plan deflates the stock market.
Companies also will raise prices on goods and services — for everything from groceries to plane tickets — to offset the increase in taxes, further adding to their bills, Gleckman says.
“For those looking to see if Biden kept his promise to not raise taxes for those making $400,000 or less, the answer is: Mostly, but not entirely,” according to Gleckman.
The White House also is pushing the benefits of the Child Tax Credit, the Earned Income Tax Credit, and Child and the Dependent Care Tax Credit as saving hundreds or even thousands for lower and middle income households.
For those who are able to take advantage of those credits, the benefits may dwarf any decrease in income. Indeed, whether a person is better off under the new tax plan will hinge almost entirely on whether or not they have children.
One thing, however, looks certain: As Biden, in addition to hiking corporate taxes, raises capital gains taxes on the wealthiest to 43.4 percent from 23.8 percent to pay for trillions of dollars in infrastructure spending, it’s the richest one percent who will shoulder the costs of everybody else’s reduced individual rates.