Millionaire rates will increase 11% in 2023 in the Democratic House plan
Drew Angerer | Getty Images News | Getty Images
Households earning $ 1 million or more will see their taxes grow by nearly 11%, on average, in 2023 due to reforms proposed by House Democrats, according to the Joint Committee on Taxation estimates published Tuesday.
They could pay $ 96,000 more that year, and their average tax rate will increase to 37.3% from 30.2%, according to forecasts.
Meanwhile, Democrat policies would give an average tax cut to all families with incomes below $ 200,000.
For example, those with $ 20,000 to $ 30,000 in income will get a 87% reduction in their federal taxes by 2023, to more than $ 18,700 in tax savings, according to the Committee’s estimates.
“The president has campaigned on ‘No one under $ 400,000 receiving a tax increase,'” said James Hines Jr., a professor of economics at the University of Michigan and director of research in his Office of Fiscal Policy Research. . ”This has severely limited any political decision [Democrats] have got. They want to be able to say they lived up to the promise. ”
As usual, the Joint Committee on Taxation will not break the tax impact by using a $ 400,000 income tax return.
However, they do it for the income group from $ 200,000 to $ 500,000. This cohort would see its tax bill grow slightly – by 0.3%, or $ 2,900 – by 2023, according to estimates.
That increase is probably entirely offset by those with more than $ 400,000 in income, Hines said.
House Democrats on Monday proposed a slew of tax reforms aimed at wealthy societies and families to help fund climate initiatives and a significant expansion of the U.S. safety net.
Its legislation will raise the first marginal tax rate on income to 39.6% and increase the first federal rate on long-term capital gains to 25% from 20%. It would also impose a 3% surtax on families with at least $ 5 million in annual income, among other measures.
The tax provisions of companies and individuals will increase by more than $ 2 trillion over a decade, according to the Joint Committee on Taxation.
More from Personal Finance:
Stimulus controls and unemployment benefits will reduce poverty by 2020, says Census
House Democrats push for permanent expansion of earned income tax credit
The House Democrats plan to close the tax gap used by crypto investors
Democrats will use some of those tax savings to preserve the expanded tax credit for children created by the U.S. Rescue Plan this year. Monthly payments of this extended tax reduction began in July.
They will also fund child care expansions, paid leave, pre-K and community education, public health insurance plans, green energy incentives and other tax credits for families.
Democratic House legislation proposes a temporary expansion of the children’s tax credit until 2025.
At that time, some middle- and low-income households would see a slight increase in their tax bills – from less than 1% to about 1.5% on average in 2027, according to the Committee – if lawmakers can’t expand further. the tax break. (However, the extent to which the tax credit maturity factors for children in this projected increase are unclear.)