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Democrats' tax plan would cut bills for most Americans -congressional estimate

EconomySep 14, 2021 11:02PM ET
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© Reuters. FILE PHOTO: The U.S. Capitol Building is pictured in Washington, U.S., August 20, 2021. REUTERS/Elizabeth Frantz

By Richard Cowan and David Lawder

WASHINGTON (Reuters) - U.S. tax code changes sought by Democrats in the House of Representatives to help fund $3.5 trillion in domestic investments would cut annual tax bills for Americans earning less than $200,000 a year through 2025, a congressional estimate showed on Tuesday.

The bipartisan Joint Committee on Taxation estimated that expanded tax credits for children and earned income would mean people in lower-income brackets would pay far less in taxes in 2023 under the Democratic plan, which is being debated this week in the tax-writing House Ways and Means Committee.

At the other end of the income scale, tax collections from those earning over $200,000 would rise slightly in 2023, escalating to a 10.6% increase for people earning $1 million and more, the committee said.

By 2027, after an expanded Child Tax Credit expires, those earning between $30,000 and $200,000 would start to see slightly higher tax bills, according to the estimate.

REVENUE GAINS, LOSSES

The joint committee, which estimates tax revenue and credit provisions of legislation, estimated that tax increase proposals now under debate in the House Ways and Means Committee would directly raise some $2.07 trillion over 10 years.

The plan would raise the top individual income tax rate to its pre-2017 level of 39.6%, from 37% currently, on taxable income above $400,000 with a 3% surcharge on income above $5 million.

It increases the capital gains tax rate to 25% from 20% for those earning more than $400,000 but tones down President Joe Biden's proposed measures to tax more inherited wealth within rich families.

The joint committee analysis suggests the House plan may break Biden's pledge not to raise taxes on those earning less than $400,000, as the $200,000-$500,000 income category would see a 0.3% increase in 2023. Those earning $50,000-75,000 would see a 1% increase in 2027.

Democrats in coming weeks are trying to push the $3.5 trillion bill through Congress to carry out Biden's agenda of expanding child care, investing in education, green energy, health care and social services for the elderly and poor.

The joint committee estimated the provisions to pay for these initiatives would total $1 trillion from increased taxes on high-income individuals over 10 years, and $963.6 billion from increased taxes on large corporations.

These would be offset by tax credits for children, low-income workers, electric vehicles and clean energy, infrastructure finance and other tax code provisions that will reduce revenues by $1.2 trillion over 10 years, leaving a net revenue gain of about $871 million.

The joint committee analysis excludes direct spending impacts of the Democrats' legislation, which will be estimated by the Congressional Budget Office.

REPUBLICAN WALL

Republicans solidly oppose the Democratic plan, saying it will result in higher taxes for middle-class people as well as the rich. They have warned that this will prompt job losses, an economic slowdown and higher inflation.

Democrats are maneuvering to win passage without Republican support through a budget "reconciliation" process that would allow their measure to advance in the 100-member Senate by a simple majority, instead of the 60 normally required.

The Senate is split 50-50 between Democrats and Republicans.

Democrats' tax plan would cut bills for most Americans -congressional estimate
 

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Comments (10)
Joseph Kalm
Joseph Kalm Sep 15, 2021 12:14AM ET
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This message brought to you by the same people who say BLM/ANTIFA are "mostly peaceful" when they burn down minority cities across the country, and whose states are literally lined by homeless people, druggies, and human waste.
Joseph Kalm
Joseph Kalm Sep 15, 2021 12:14AM ET
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Also note how democrats tossed BLM to the curb once the election was over. Just use them for elections...they will pop back up next election and get used again.
Mike Mike
Mike Mike Sep 15, 2021 12:04AM ET
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Democrats are making hard working Americans pay more tax to feed those lowlife welfare recipients.
Jack Bquick
Jack Bquick Sep 14, 2021 11:17PM ET
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Reuters, it's not nice to lie.
Lemon Lime
Lemon Lime Sep 14, 2021 11:17PM ET
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Reading is fundamental.
James Pattison
James Pattison Sep 14, 2021 11:16PM ET
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Trumps tax cuts added money because companies repatriated foreign profit… you dont seem to understand how it works… this tax increase will be on families making over 50,000$ it will devastate the middle class… thats the idea… democrats need more poor people to “help” they expand thier base….
James Pattison
James Pattison Sep 14, 2021 11:12PM ET
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This is not true…cbo said it will raise taxes on 50,000 dollar earners… give me a break… boomers are spending all the future generations money so they never have to live in a recession… future generations will live in inflation
milena villa escobar
milena villa escobar Sep 14, 2021 4:28PM ET
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So the Democrats are going to pay for 4.7 trillion dollars in spending with tax cuts. Only Reuters would write something like that
Felipe Daniel
Felipe Daniel Sep 14, 2021 4:12PM ET
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Doubt it, Democrats lie daily
Me comment
Me comment Sep 14, 2021 3:33PM ET
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After trumps tax cut for the rich and corporate america added $2.5 trillion to the deficit, the infrastructure bill will be relatively neutral to the deficit with these tax increase. Sounds like a win win for the middle-class.
Felipe Daniel
Felipe Daniel Sep 14, 2021 3:33PM ET
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Lol
milena villa escobar
milena villa escobar Sep 14, 2021 3:33PM ET
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Are you high right now?
Elephan Mann
Elephan Mann Sep 14, 2021 3:33PM ET
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were you born this stew' pid?
Billy Wood
Billy Wood Sep 14, 2021 3:33PM ET
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You obviously don't understand the tax system.
James Pattison
James Pattison Sep 14, 2021 3:33PM ET
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Trumps tax cuts added money because companies repatriated foreign profit… you dont seem to understand how it works… this tax increase will be on families making over 50,000$ it will devastate the middle class… thats the idea… democrats need more poor people to “help” they expand thier base….
Stephen Willis
Stephen Willis Sep 14, 2021 2:31PM ET
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Democrats are living in a dream !
Steve Dyer
WaveRunner Sep 14, 2021 2:27PM ET
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I love that they think this is an "investment"........ just goes to show you how out of touch with reality they are!!
 
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