House Democrats plan to raise taxes on millionaires by 11% in 2023

House Democrats plan to raise taxes on millionaires by 11% in 2023

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Households earning $ 1 million or more will, on average, increase their taxes by about 11% in 2023, according to the Joint Committee on Taxation projections released on Tuesday, due to reforms proposed by House Democrats.

It is estimated that they will pay an additional $ 96,000 that year and their average tax rate will drop from 30.2% to 37.3%.

Meanwhile, Democrats’ policies would offer an average tax deduction for all households earning less than $ 200,000.

For example, people with incomes of $ 20,000 to $ 30,000 would get an 87% reduction in their federal taxes in 2023, which the committee estimated would result in a tax savings of over $ 18,000. $ 700.

According to James Hines Jr., professor of economics at the University of Michigan and research director in its Office of Tax Policy Research, “the president campaigned that ‘no one under $ 400,000 would benefit from’ an increase in taxes ”. “” It strictly hampered every political decision [Democrats] made. They want to be able to say that they have kept that promise.

As usual, the Joint Committee on Taxation does not break down the tax implications using the income limit of $ 400,000.

However, they do it for the income group of $ 200,000 to $ 500,000. According to projections, this group will see its tax bill increase slightly – 0.3% or $ 2,900 – in 2023.

Hines said that increase could be fully fueled by people with incomes above $ 400,000.

fiscal policies

House Democrats on Monday proposed tax reforms targeting wealthy businesses and families, to help support climate initiatives and a significant expansion of the U.S. safety net.

His law would increase the top marginal tax rate to 39.6% and the top federal rate on long-term capital gains from 20 to 25%. It would also impose an additional 3% tax on households with an annual income of at least $ 5 million, among other measures.

According to the Joint Committee on Taxation, corporate and personal tax provisions will bring in more than $ 2 trillion over a decade.

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Democrats will use some of those tax savings to preserve the expanded child tax credit created by the US bailout this year. Monthly payments for this extended tax break began in July.

They will also fund the expansion of child care services, paid time off, preschool and community college education, public health insurance plans, green energy incentives and other credit. tax for households.

House Democrats’ legislation proposes a temporary extension of the child tax credit until 2025.

At this point, some low- and middle-income households will see a slight increase in their tax bill – from less than 1% on average in 2027 to about 1.5% in 2027, according to the committee – if lawmakers cannot. go ahead with the tax ticket. (It is not clear how well the elimination of the child tax credit reflects this planned increase.)

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