Over a 10-year period, former Vice President Joe Biden’s plans for the economy would increase tax revenue by $3.375 trillion and jump federal spending by $5.35 trillion, according to an analysis released Monday by the Penn Wharton Budget Model.
The Hill reports that after accounting for macroeconomic effects, Biden’s plans would slightly increase the federal debt and decrease gross domestic product in 2030. But by 2050, the debt would decrease and GDP would increase compared to the current law, the analysis found.
In 2030, Biden’s tax and spending proposals would decrease the GDP by 0.4% and increase debt held by the public by 0.1% when compared to the current law baseline. But in 2050, his plans would increase GDP by 0.8% and decrease debt held by the public by 6.1% compared to what is currently in place, according to researchers.
“At the end of the day, they actually decrease debt because they do have significant revenue raisers,” Richard Prisinzano, director of policy analysis for PWBM, told The Hill. “And the economy is more productive. As we put in things like education and infrastructure, workers become more productive, and that gives a boost to the economy.”
Biden’s tax plan would increase taxes for corporations and people earning high income levels.
He proposes raising the top individual income tax rate from 37 to 39.6%, requiring earnings above $400,000 to be subject to Social Security payroll taxes, taxing capital gains at the same rate as ordinary income for people with income of more than $1 million, raising the corporate tax rate from 21 to 28%, increasing the tax rate on foreign profits, and creating a 15% minimum tax for corporations with income on their financial statement of more than $100 million.
The analysis looked at Biden’s spending proposals in education, infrastructure and research and development, housing, Social Security, and health care. It included Biden’s proposals to expand tax credits in its spending estimates, rather than its tax revenue estimates. It did not look at tax proposals that would help stop companies from moving jobs overseas.
Researchers found that Biden’s corporate tax proposals would raise about $1.4 trillion, his payroll tax proposals would bring in about $993 billion, and his individual income tax proposals would raise $944 billion from 2021 through 2030.
While Biden has promised not to raise taxes on anyone earning under $400,000, PWBM noted in its report that “under the Biden tax plan, households with adjusted gross income (AGI) of $400,000 per year or less would not see their taxes increase directly but would see lower investment returns and wages as a result of corporate tax increases.”
According to the report, those with AGI at or below $400,000 would, on average, see their after-tax incomes decrease by 0.9%, while those with income above $400,000 would see their after-tax incomes decrease by 17.7%.
Prisinzano told The Hill that if the corporate tax increase is not included, PWBM’s estimates show no tax increases for people with incomes under $400,000.
When it comes to federal spending, the analysis found that Biden’s education plans would increase spending by $1.9 trillion from 2021 through 2030. His plan includes universal pre-K, expanding funding for Title I schools, two years of debt-free community college, and tuition-free public college for students whose families earn less than $125,000.
Biden’s infrastructure plan would increase spending by $1.6 trillion in the 10-year period, his plan for low-income housing would bump up spending by $650 billion, and his plans to increase Social Security benefits would increase spending by $291 billion, according to the report.
His plan to lower prescription drug prices would reduce federal spending by about $1.3 trillion. But some of his other healthcare plans would increase federal spending by about $1.6 trillion over 10 years.
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