Taxes on millionaires to rise 11% in 2023 as part of House Democratic plan


drew anger | Getty Images News | Getty Images

Households earning $ 1 million or more would see their taxes increase by almost 11%, on average, in 2023 due to reforms proposed by House Democrats, according to Joint Committee on Taxation estimates released Tuesday.

They would pay $ 96,000 more that year, and their average tax rate would drop from 30.2% to 37.3%, according to projections.

Meanwhile, Democrat policies would grant an average tax cut to all households with incomes below $ 200,000.

For example, those with between $ 20,000 and $ 30,000 in income would get an 87% reduction in their federal taxes by 2023, which represents more than $ 18,700 in tax savings, according to the Committee’s estimates.

“The president campaigned on ‘No one under $ 400,000 gets a tax hike’,” according to James Hines Jr., professor of economics at the University of Michigan and director of research at his office of Tax Policy Research. “It severely limited all political decisions [Democrats] did. They want to be able to say they kept that promise. “

ALSO READ  Stocks making the biggest moves pre-market: Coinbase, Tesla, Citrix PayPal and more

As usual, the Joint Committee on Taxation does not break down the tax impacts using a revenue boundary of $ 400,000.

However, they do it for the income group of $ 200,000 to $ 500,000. This cohort would see its tax bill increase slightly – by 0.3%, or $ 2,900 – in 2023, according to estimates.

This increase is probably fully supported by those with more than $ 400,000 in income, Hines said.

Tax policies

House Democrats on Monday proposed a series of tax reforms targeting wealthy businesses and households to help fund climate initiatives and a significant expansion of the U.S. safety net.

ALSO READ  TBEN poll shows very little will persuade unvaccinated Americans to get vaccinated against Covid

Their legislation would increase the top marginal tax rate to 39.6% and increase the maximum federal rate on long-term capital gains from 20% to 25%. It would also impose a 3% surtax on households with at least $ 5 million in annual income, among other measures.

Corporate and personal tax provisions would bring in more than $ 2 trillion over a decade, according to the Joint Committee on Taxation.

More from Personal Finance:
Stimulus checks and unemployment benefits reduced poverty in 2020, census shows
House Democrats call for permanent extension of earned income tax credit
House Democrats’ plan would close tax loophole used by crypto investors

Democrats would use a portion of those tax savings to preserve the expanded child tax credit created by the US bailout this year. Monthly payments for this expanded tax break began in July.

ALSO READ  Food is becoming more expensive in the United States, and it's not just because of Covid

They would also fund the expansion of child care centers, paid vacations, preschool education and community colleges, public health insurance plans, green energy incentives and other tax credits for households. .

House Democrats’ legislation proposes a temporary extension of the child tax credit until 2025.

By then, some low- and middle-income households would see a slight increase in their tax bill – ranging from less than 1% to about 1.5% on average in 2027, according to the Committee – if lawmakers cannot not further extend the tax break. (However, the extent to which the expiry of the child tax credit reflects this expected increase is unclear.)



Please enter your comment!
Please enter your name here