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Spending Bill Would Break Biden Pledge Not To Raise Taxes On Middle Class

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According to a recent analysis by the Tax Policy Center, President Biden’s spending package shows that provisions in it would be contrary to his promise that tax increases will only affect Americans who earn $400,000 or more.
The Tax Policy Center states how all major tax provisions, roughly 20-30% of middle-income homes, will pay more taxes in 2022.

According to the think tank, tax increases would be very modest, with households of low and middle income paying $100 more on average if they were subject to a tax hike. If the plan is implemented, households with incomes between $200-$500K would be paying an average of more than two hundred dollars each year.

Even a modest increase would be in contradiction to Biden’s often-repeated claim, that tax increases implemented to pay for his $1.75 trillion spending bill will only affect the wealthiest Americans. The GOP and critics of Biden’s signature legislation argue that the middle class will be affected by a tax increase if it is implemented.

Biden gave a speech in Michigan promoting the Social Spending Bill and emphasized how these bills will add nothing to the deficit. “Zero,” Biden said. He went on to say that was his promise when he ran for office, adding how no one who earns less than $400K per year will see their taxes go up.

The Tax Policy Center’s analysis found that the spending bill’s provisions would cut taxes on average for “almost all income groups” in 2022. The top 1% of income would be paid an average of $55K more annually, while the top 0.1% would receive an additional $585K.

The analysis of direct taxes only, which are individual income taxes as well as payroll taxes, revealed that most income groups would experience a reduction in their taxes. The plan would also cut 2022 taxes in an average amount for all income groups, except the top 1%. According to the center, the highest-income households will see roughly the same increase in taxes in 2022 as they would with any major provisions.

The analysis also revealed that the provision in the spending bill to increase the state and local tax (SALT), deduction cap, “would almost no benefit middle-income households,” while benefitting wealthy Americans.

It would cut their 2021 taxes by $20 on average. The tax cut would be just over $400 for those earning between $175,000 to $250,000, or around 0.2 percent of their after-tax income. The analysis showed that the SALT cap increase would boost after-tax incomes for those who earn between $370,000 and $870,000 (the 95th through 99th percentile).

The center pointed out that its analysis was based on a similar version of the spending bill to which the Joint Committee on Taxation had analyzed on Nov. 4. The bill’s final text could be modified. The Budget Office is currently scoring the legislation. A vote is expected later in the month.

Moderate progressives, such as Sen. Joe Manchin from West Virginia, raised concerns about the bill’s cost. Manchin said that he would not support any bill that increases the federal deficit. He argued that unchecked spending is fiscally reckless given the rising inflation that has risen the cost of living for many Americans.

Biden and his aides insist that the tax increases and other initiatives such as increased funding for the Internal Revenue Service will fully pay the bill’s cost and reduce the deficit in the next years.

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