Under the tax plan from Democratic presidential nominee Joe Biden, people earning more than $400,000 a year could pay combined federal and state income taxes at rate of more than 62%, CNBC reported.
“On the income side, on the federal side, there are two basic increases that Biden is proposing. The first is a top rate going from 37 to 39.6%. And then you've got the payroll tax of 12.4% applying to income over $400,000,” CNBC’s Robert Frank said.
“So, half of that payroll tax is paid by employers, so you add those two changes together, and you get a new top federal rate of 45.8 percent. Then you add the net investment income tax and other provisions and you get a total top rate of 49.6%,” Frank said.
“Let's go to the state side on top of that. If you live in California, that combined rate would go to 62.6%. New Jersey would be over 60%. New York state would jump to 58%. Not too bad, but New York City residents, would see a combined state and federal rate of just over 62%. Now, with tax increases being proposed both in New York and California, those rates would likely go even higher,” Frank said.
President Donald Trump claimed that his re-election would bring prosperity but that a victory by Biden would lead to recession, in an escalation of his economic attack on the frontrunner weeks before the election.
“It’s the choice between historic prosperity under my pro-American policies or very crippling poverty and a steep depression under the radical left,” Trump said last week. “It’s a choice between a socialist nightmare and the American dream.”
Trump, speaking from the White House Rose Garden, delivered an online economic address to Wall Street and corporate leaders just weeks before the election. He broadly pledged new cuts to business and personal income taxes if re-elected, without giving specifics, Bloomberg reported.
The president has stepped up warnings in recent weeks that Biden and Democrats would hurt the economic recovery while claiming his re-election would lead to rapid job growth.
He said that in a second term, he’d cut middle-class taxes, further reduce regulations, and impose tariffs on companies that move from the U.S. to other countries.
Trump claimed that Biden’s election would lead to “the highest business tax rate in the developed world” and that millions of jobs would move “out of America and into China.”
He said Biden wants to raise taxes by $4 trillion, a reference to a plan by Biden that stretches over a decade and is aimed at high-income earners.
Meanwhile, Biden’s proposals would increase taxes by $2.4 trillion over a decade -- about $1.6 trillion less than previously estimated partly because of the pandemic’s impact, according to new figures from the Urban-Brookings Tax Policy Center.
The updated estimate revises figures published by the group in early March and takes into account new ideas from the Biden campaign, as well as the slowdown in the economy because of the coronavirus pandemic that likely will force a one-year delay for putting tax increases in effect, Bloomberg reported.
The estimate also excludes some provisions that the left-leaning Tax Policy Center said they could not adequately model, including a measure to repeal some tax breaks for real estate.
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