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Politics: Biden plan would raise average tax rate for households above $1M: JCT

Democrats’ ‘SALT’ headache hangs over budget reconciliation bill

  Democrats’ ‘SALT’ headache hangs over budget reconciliation bill Democrats set out to pay for their massive clean energy and social spending package with tax increases on the wealthy, but a parochial desire among lawmakers from high-tax states to provide relief from a $10,000 cap on state and local tax deductions has undermined that goal. Any adjustment risks providing a windfall to wealthy taxpayers […] The post Democrats’ ‘SALT’ headache hangs over budget reconciliation bill appeared first on Roll Call.

Households with income of at least $1 million would see their average tax rate increase in 2022 under House Democrats' social spending and climate bill, according to a corrected report released by the Joint Committee on Taxation (JCT) on Tuesday.

Biden plan would raise average tax rate for households above $1M: JCT © Julia Nikhinson Biden plan would raise average tax rate for households above $1M: JCT

The average tax rate for those taxpayers would increase from 29.9 percent under current law to 33.1 percent, JCT said.

The corrected report comes after JCT, Congress's nonpartisan tax scorekeeper, originally released a report on Friday that found that the average tax rate in 2022 for taxpayers with income of at least $1 million would decrease slightly, from 29.9 percent to 28.2 percent.

A minimum corporate tax would ensure everyone pays their fair share

  A minimum corporate tax would ensure everyone pays their fair share As Democrats continue their work on finalizing the Build Back Better plan, hopefully they will keep workers in mind who rely on these jobs to provide for their families by supporting a minimum corporate tax as opposed to a corporate tax increase. Parris Glendening served as governor of Maryland from 1995-2003.

That finding caught the attention of some right-leaning tax experts. However, JCT said Tuesday that it had initially made an error in calculating the average tax rates for 2022.

White House Chief of Staff Ron Klain took note of the correction on Twitter.

The social spending bill that the House passed on Friday includes several provisions aimed at increasing taxes on high-income households, including a surtax that would apply to households' income above $10 million. But it also includes a provision to increase the cap on the state and local tax (SALT) deduction from $10,000 to $80,000, which several think tanks have estimated would largely benefit high-income households.

The Urban-Brookings Tax Policy Center has estimated that about two-thirds of taxpayers in the top 1 percent of income - those with income of above $885,000 - would get a tax cut in 2022 under the bill. However, households in the top 1 percent would on average see a tax increase.

Republicans have been attacking Democrats over the provision on the SALT deduction, and some Democratic lawmakers have also raised concerns about it. Key Democratic senators are working on an alternative proposal on the SALT deduction that would focus changes to the cap on households with income under a level between $400,000 and $550,000.

GOP ramps up attacks on SALT deduction provision .
Republicans are ramping up attacks on a key tax provision under discussion for President Biden's social spending package, even as Democrats have yet to reach a consensus among themselves on the issue.Democrats from high-tax states such as New York and New Jersey want the spending package to undo the $10,000 cap on the state and local tax (SALT) deduction. But some progressives and some moderate Democrats are concerned that rolling back the cap would benefit wealthy Americans.

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