Former President Donald Trump recently took to Truth Social to warn of ‘colossal’ tax hikes if President Joe Biden is reelected. This claim, however, requires a closer examination. According to FactCheck.org, Biden’s latest budget proposal supports extending the tax cuts championed by Trump for people making less than $400,000.
Trump’s claim that the ‘typical family’s’ tax bill has been reduced by ‘thousands’ due to the 2017 Tax Cuts and Jobs Act is somewhat misleading. The Tax Policy Center analysis shows that the law reduced individual income taxes owed by Americans by about $1,260 on average in 2018. Taxpayers in the middle 20% of earners saw an average tax cut of about $800. The ‘thousands’ in savings were primarily seen by those in the top quintile of earners.
Trump’s warning about ‘colossal tax HIKES’ under Biden’s administration has been a recurring theme. However, Biden’s major tax changes have included setting a minimum corporate tax rate and lowering taxes for some families by expanding the child tax credit and making it fully refundable. His plan to raise an additional $4 trillion in taxes over the next decade would primarily affect very high-income earners and corporations, not the ‘typical’ American family.
Biden’s fiscal year 2025 budget contains many of the same proposals and does not include any ‘colossal tax hikes’ on typical American families. It proposes to increase the corporate income tax rate from 21% to 28%, restore the top individual tax rate of 39.6% from the current rate of 37%, and impose a 25% minimum tax on very wealthy individuals. It also proposes to extend the expanded child tax credit enacted in the American Rescue Plan through 2025, and to make the child tax credit fully refundable on a permanent basis.
While Biden’s plan would increase taxes on businesses and high-income people, it would also expand tax credits for lower-income households. The bottom 60 percent of earners would see increases in after-tax income in 2025, while the top 40 percent of earners would see decreases. However, the Tax Foundation warns that the proposed changes could harm the economy in the long run.
In conclusion, while Trump’s warning about ‘colossal’ tax hikes may sound alarming, a closer look at the facts reveals a more nuanced picture. It’s crucial to understand the intricacies of these tax proposals and their potential impact on different income groups. As always, it’s important to make informed financial decisions based on accurate information.