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Biden Promises No Tax Increases for Those Making Under $400,000

Posted on June 1, 2020

Taxpayers earning less than $400,000 wouldn’t see a tax increase under a Joe Biden administration, according to the former vice president and presumptive Democratic presidential nominee.

“Nobody making under 400,000 bucks would have their taxes raised, period,” Biden said May 22 on CNBC.

That cutoff is higher than the one proposed by former President Obama, who had repeatedly pledged not to raise taxes on Americans earning less than $250,000 annually. Under Biden’s proposal, 98 percent of Americans would be spared a tax increase.

That $400,000 marker has shown up in other Biden tax proposals as well. For one, he has proposed applying the Social Security payroll tax to earnings above that amount, which the Urban-Brookings Tax Policy Center has estimated would raise almost $1 trillion over 10 years.

Biden has also proposed repealing the income tax cuts in the Tax Cuts and Jobs Act for those making more than $400,000. But when asked on CNBC if he would still repeal those cuts in the midst of the coronavirus pandemic, he raised the cutoff for that plan, responding that he would repeal the cuts for those making more than $1 million annually.

Biden also reaffirmed his support for raising the corporate tax rate to 28 percent. Under the TCJA, that rate was lowered from a high of 35 percent to 21 percent.

President Trump has frequently said that he would like to see the rate drop another percentage point, to 20 percent, but Biden said he hasn’t seen evidence that the lower rate has contributed to job creation. “What jobs have they created, if we give them more of a tax cut?” he asked.

The Tax Foundation said last month that increasing the corporate tax rate and creating a new corporate alternative minimum tax, as Biden has also proposed, would slow the economy’s recovery from the pandemic. Others have also said Biden’s proposed tax increases should be delayed until the economy improves.

Biden specifically mentioned Amazon as one corporation that must pay more in taxes, after the company famously wasn’t required to pay federal income taxes in 2017 and 2018 despite bringing in hundreds of billions of dollars in revenue during that span.

“I don’t think any company . . . should absolutely be in a position where they pay no tax and make billions and billions and billions of dollars,” Biden said.

Amazon announced in January that it would be paying federal income taxes for 2019, listing more than $1 billion in federal income tax expense on its summary of taxes for the year. It listed another $4 billion in other federal, state, and local taxes that it had paid or would pay for 2019.

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