President Joe Biden will likely eliminate a proposal to increase the state and local tax deduction (SALT) in the Democrats’ infrastructure bills, according to a report.
The average top tax rate would reach 57.4 percent, and the top rate would breach 50 percent in all 50 states.
The top marginal tax rate at the federal level would be 51.4 percent. Most states also deduct an income tax, the average being 6.0 percent, which would bring the top rate to 57.4 percent.
The top marginal tax rate on income at the federal level is currently 37 percent, scheduled to raise to 39.6 percent in 2026. The marginal rate only applies to those making above the top threshold of half a million dollars ($500,000) per year.
The new top rate would surge the US to the front of the pack of the 38-member Organisation for Economic Co-operation and Development - ahead of Japan at 55.9 percent, France at 55.4 percent, Austria at 55.0 percent and Greece at 54.0 percent, according to the Tax Foundation.
The US' current top income tax rate, 42.9 percent, leaves the nation at 23rd out of 38 countries. Hungary and the Czech Republic currently have the lowest top rates at 15 percent.
Under the plan, eight states plus the District of Columbia would have top rates over 60 percent. Taxpayers in California would take the biggest hit at 64.7 percent, and New York, 66.2 percent.
Under the plan, the wealthiest US households would face a 5 percent surcharge on modified adjusted gross income (MAGI) above $10 million, plus a 3 percent charge on MAGI above $25 million, according to the analysis.
© OCED.stat
© OECD.stat
On the corporate side, the bill would institute a 15% minimum tax on large corporations and a 1% surcharge on corporate stock buybacks. .
Penn Wharton estimates that the Build Back Better bill, which Democrats say would cost $1.75 trillion over 10 years and bring in $2 trillion in revenue, would actually cost $1.87 trillion while raising $1.56 trillion in revenue over 10 years.
Penn Wharton estimates that if the provisions of the bill, aside from the green energy tax cuts, are made permanent, the real cost of the bill would be $3.98 trillion, while the tax revenue would stay at $1.55 trillion, over 10 years.
The biggest differences between the White House's calculations and Wharton's were the 15 per cent minimum tax on corporations. The tax only applies to companies that reported over $1 billion in income for three straight years.
Analysts found the revenue would be around $195billion - considerably less than the White House's $325 billion estimate.
Biden's plan to bolster the IRS with more agents, new technology and taxpayer services was sold as bringing in $400billion but Wharton researchers found it would be closer to half that at $190billion.
On Friday, the House passed the $1.2T bipartisan infrastructure bill, and House Speaker Nancy Pelosi on Tuesday assured the House would pass the new $1.75 trillion Build Back Better plan, trimmed down from $3.5 trillion, the week of Nov. 15.
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With Biblical undertones.