Americans of all incomes would see their federal taxes rise as part of the climate and health care package that was negotiated last week between Senate Majority Leader Chuck Schumer and moderate Democratic Senator Joe Manchin, according to data from the nonpartisan Joint Committee on Taxation released Saturday by Republicans. to the Senate Finance Committee.
However, the analysis takes into account the indirect effect of the provision of the bill to impose a minimum tax of 15% on certain corporations. Economists assume that companies would then pass on part of their tax increase to employees by reducing their after-tax wages and job opportunities. In addition, shareholders would take a hit as the value of their equity holdings, including those held in pension plans and mutual funds, would likely decline.
The minimum tax measure is expected to bring in $313 billion over a decade, according to the JCT.
Republicans point to the report as evidence that the package, which Democrats hope to push through the equally divided Senate through the reconciliation process so they don’t need GOP votes, would violate President Joe’s pledge. Biden and congressional Democrats not to raise taxes on those earning less than $400,000.
But it’s a “bogus argument,” said Steve Rosenthal, a senior fellow at the nonpartisan Center for Fiscal Policy, calling it “more of a gimmick.” The president and Democratic leaders have promised not to raise taxes directly on Americans earning below that threshold, he said.
Analyzes of some of Biden and the party’s previous proposals to raise corporate taxes have also shown an indirect effect on people at all income levels. However, the Build Back Better package that the House passed last year included provisions such as the improved child tax credit, which would have helped low- and middle-income families.
Federal taxes would rise by $16.7 billion for US taxpayers earning less than $200,000 next year, according to the JCT. And those earning between $200,000 and $500,000 would see their levy jump by $14.1 billion. Those with incomes over half a million dollars would be hit by a $23.5 billion increase.
By 2031, when new energy credits and subsidies are expected to provide an even greater benefit to high-income Americans, those earning less than $400,000 are expected to pay up to two-thirds of the additional tax revenue collected that year. according to the Republicans on the Senate Finance Committee.
It is standard procedure for the JCT to allocate additional levies on corporations to employees and shareholders of all income levels.
“You have to shift the corporate tax burden onto somebody,” said William McBride, vice president of federal tax and economic policy at the Tax Foundation. “He comes across a mixture of [stock] owners and workers, and these are all across the income scale.
Manchin argued on CNN on Sunday that the bill “imposes no burden on taxpayers.”
He also challenged a preliminary analysis of Penn Wharton’s budget model which showed the package “would very slightly increase inflation until 2024 and decrease inflation thereafter”.
“Well, we found that they were wrong. And people can be wrong, but how the hell can that be incendiary? he told CNN’s Jake Tapper on “State of the Union.” “How can it add flames to the fires of inflation right now if you pay down the debt?”
He added: “We are doing everything we can to make sure we are tackling the problem. And these are solutions to the problems that we have. So I know those who play politics with it.