Biden’s $ 1.75 trillion Build Back Better plan would give the US the highest peak average income tax in the developed world, a new study says
- The average top tax rate would reach 57.4 percent, and the top rate would exceed 50 percent in all 50 states
- The top tax rate at the federal level would be 51.4 percent
- Most states also deduct an income tax, the average is 6.0 percent, which would bring the top rate to 57.4 percent
- California taxpayers would be hardest hit at 64.7 percent and New York at 66.2 percent
If President Biden’s Build Back Better Agenda passes the Senate in its current form, the US would have the highest income tax in the developed world.
The average top tax rate would reach 57.4 percent, and the top rate would exceed 50 percent in all 50 states.
The top federal tax rate would be 51.4 percent. Most states also deduct an income tax, the average is 6.0 percent, which would bring the top rate to 57.4 percent.
The top tax rate for income at the federal level is currently 37 percent and is to be increased to 39.6 percent in 2026. The marginal tax rate applies only to those who exceed the limit of half a million dollars per year.
The new top rate would put the USA at the top of the 38-strong Organization for Economic Cooperation and Development – ahead of Japan with 55.9 percent, France with 55.4 percent, Austria with 55.0 percent and Greece with 54.0 percent. according to the information provided by the tax foundation.
The current top US tax rate of 42.9 percent puts the country in 23rd place out of 38 countries. Hungary and the Czech Republic currently have the lowest peak values at 15 percent.
According to the plan, eight states plus the District of Columbia would have peak rates of over 60 percent. Taxpayers in California would be hardest hit at 64.7 percent and New York at 66.2 percent.
Under the plan, the wealthiest US households would pay a 5 percent surcharge on modified adjusted gross income (MAGI) over $ 10 million, and a 3 percent fee on MAGI over $ 25 million, according to the analysis.
The bill would also remove provisions in tax law that would allow wealthy taxpayers to avoid the 3.8 percent Medicare surcharge and would strengthen enforcement by the IRS to tackle wealthy tax evaders.
On the corporate side, the bill would introduce a minimum tax of 15% on large companies and a 1% surcharge on company share buybacks. .
Penn Wharton estimates that the Build Back Better bill, which Democrats say would cost $ 1.75 trillion and generate $ 2 trillion in sales over 10 years, actually cost $ 1.87 trillion while it would have sales of $ 1.56 trillion over 10 years.
Penn Wharton estimates that the real cost of the bill would be $ 3.98 trillion if the bill’s provisions were made permanent, apart from tax cuts on green electricity, while tax revenues over 10 years would be $ 1.55 trillion. Dollars would remain.
The biggest difference between the White House and Wharton’s calculations was the 15 percent minimum corporate tax. The tax only applies to companies that have earned over $ 1 billion in income for three consecutive years.
Analysts determined that revenue would be around $ 195 billion – significantly less than the White House’s $ 325 billion.
Biden’s plan to bolster the IRS with more agents, new technology, and services to taxpayers sold for $ 400 billion, but Wharton researchers found it would be about half that at $ 190 billion.
The House of Representatives passed the $ 1.2 trillion bipartisan infrastructure bill on Friday, and House Speaker Nancy Pelosi assured Tuesday that the House of Representatives would pass the new $ 1.75 trillion Build Back Better plan which was cut by $ 3.5 trillion in the week of November 15.