HomeBiden’s tax plan will push the highest per capita income rate up among developed countries

Biden’s tax plan will push the highest per capita income rate up among developed countries

The United States will have the highest personal income tax Rate in the developed world under A White House The proposal that would reform the country’s tax code for funding President BidenSigning spending plan.

The framework Biden unveiled costs nearly $1.75 trillion ($1,750,000,000,000), which includes funding for universal pre-kindergarten, expanded one-year children’s tax credit, expanded Medicaid revised and clean energy tax credits. , among other things. It relies on a minimum corporate tax of 15%, additional taxes on the top tier of American households, stricter taxation, taxes on corporate share buybacks, and higher taxes on US corporate earnings from abroad.

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But the Biden team’s proposal, which comes after months of negotiations among Democrats, would raise the average higher personal income tax rate to 57.4%, the highest in the 38-member Organization for Economic Co-operation and Development, according to the new analysis Published by the Nonpartisan Tax Foundation.

Foreign Minister Anthony Blinken, left, speaks during a closing session at the OECD Ministerial Council meeting, Wednesday, October 6, 2021, in Paris. (AP Photo/Patrick Semansky, Pool/AP Newsroom)

The top tier of US households will face an additional 5% fee on adjusted adjusted gross income (MAGI) over $10 million, as well as a 3% fee on MAGI over $25 million, a total increase of 8% – which equates to about 9.1 The percentage of the tax rate on taxable income, the analysis shows.

The Build Back Better plan would also close provisions in the tax code that allow some wealthy taxpayers to avoid paying an additional 3.8% Medicare tax on their earnings by boosting the net investment income tax for anyone who earns more than $400,000.

Under current law, the top marginal tax rate on ordinary income is set to rise from 37% to 39.6% in 2026 when parts of the 2017 Republican Tax Code expire. This means that the highest marginal personal income tax rate at the federal level will rise to 51.4 % in 2026, or approximately 52.5% based on taxable income.

“As policymakers explore options to increase revenue, they should keep in mind how the United States compares to other countries and what the economic impacts might be,” the analysis said. “Raising the highest marginal ordinary income tax rate to the highest in the Organization for Economic Co-operation and Development would hurt US competitiveness. It would also reduce incentives to work, save, invest, and innovate, with broad implications for the US economy.”

US President Joe Biden delivers a speech on the bipartisan infrastructure deal and Building a Better Agenda at the NJ Transit Meadowlands Maintenance Complex on October 25, 2021 in Kearney, New Jersey. (Photo by Michael M. Santiago/Getty Images/Getty Images)

This rate does not include state income tax, which most Americans pay (only eight states do not tax income). The average top marginal tax rate statewide is about 6%, according to the Tax Foundation, which means the highest personal income tax rate would be about 57.4%. This is higher than any rate currently charged in a developed country.

Wealthy taxpayers in New York and California will pay the highest tax rates of 66.2% and 64.7%, respectively, while six other states have tax rates above 60%.

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“Even in states that are forgoing income tax, such as Florida, taxpayers will have a higher rate of 51.4 percent, far exceeding the highest rates found in most OECD countries,” the Tax Foundation said.

President-elect Joe Biden points onstage after giving a speech, Saturday, November 7, 2020, in Wilmington, Del. (AP Photo/Andrew Harnik, Pool)

Japan and Denmark are currently tied among the OECD countries with the highest income tax, at 55.9%. It is followed by France (55.4%), Austria (55%) and Greece (54%).

The United States currently has the highest aggregate rate of 42.9%.