President Biden outlines tax plan
President Biden outlined his tax plan on the wealthiest Americans, corporations to Congress Wednesday night.
WASHINGTON - President Joe Biden’s massive $1.9 trillion relief package which was signed into law in March slashed taxes for lower-income Americans.
According to a recent report from Congress’ Joint Committee on Taxation, Americans who make between $75,000 and $100,000 a year will pay an average tax rate of just 1.8%. Taxpayers who earn less than $75,000 annually will pay no taxes, on average, in 2021.
The broadly nonexistent federal tax bill for those making less than $75,000 is thanks to a variety of provisions in the American Rescue Plan, including a historic Child Tax Credit as well as federal stimulus payments.
It’s a stark contrast from the 2.4% average tax rate that many who earned between $50,000 and $75,000 had to pay in 2018.
RELATED: $3,000 child tax credit: Here’s what parents need to know
During a visit to a local community college in Virginia on Monday, Biden reiterated his pledge thatAmericans earning less than $400,000 would not pay "a single penny" in additional taxes.
"The reason I’m bothering to do this is I keep hearing in the press ‘Biden’s going to raise your taxes,'" the president said.
Biden has touted that his historic bill, which temporarily raises the child tax credit, will permanently change the way the country deals with child poverty.
The American Rescue Plan temporarily raises the child tax credit, now at a maximum of $2,000, to as much as $3,600 per child annually. The plan also expands the credit so it’s fully available to the poorest families.
According to the Joint Committee on Taxation of Congress, roughly 48 million households are expected to claim the child tax credit for 2020.
Families are eligible for up to $3,600 annually for each child under age 6 and as much as $3,000 for children up to age 17.
While the tax breaks and other legislation will cost trillions, Biden aims to cut income inequality by attacking corporate America’s tax-avoidance schemes.
At one time — the early-to-mid-1950s — corporations accounted for 30% of federal tax collections. Last year, their share barely topped 7%.
This story was reported from Los Angeles.
With a background in economics and tax policy, I've closely followed President Biden's tax plan and its implications. The $1.9 trillion relief package signed into law in March significantly reshaped the tax landscape, particularly benefiting lower-income Americans. The American Rescue Plan brought about substantial changes, including a historic Child Tax Credit increase and federal stimulus payments. For instance, individuals earning less than $75,000 annually are projected to have no federal tax bill in 2021 due to these provisions, a stark contrast from the 2.4% average tax rate in 2018 for those making $50,000 to $75,000.
President Biden has been vocal about his pledge not to increase taxes for Americans earning less than $400,000, emphasizing the importance of relieving tax burdens on middle and lower-income brackets. The Child Tax Credit has been temporarily expanded, raising the maximum credit from $2,000 to $3,600 per child annually, with eligibility extended to more families, targeting child poverty.
The tax breaks and measures introduced aim to tackle income inequality by addressing corporate tax avoidance. Biden's strategy includes reforming corporate taxation, highlighting the substantial decline in corporate contributions to federal tax collections over the years, dropping from 30% in the early-to-mid-1950s to barely exceeding 7% last year.
The plan's overarching goal is to redistribute the tax burden, providing relief to lower-income households while attempting to rectify corporate tax loopholes to create a fairer tax system. This strategy aligns with Biden's vision to reshape taxation policy, emphasizing social welfare and income equality.
The Joint Committee on Taxation's reports and analyses have been crucial in understanding the impacts of these policies, revealing the projected number of households benefiting from the expanded Child Tax Credit and the potential for significant relief for lower-income families.
My familiarity with economic policy, tax reforms, and ongoing discussions surrounding these topics allows me to appreciate the nuances and the broader impact of President Biden's tax plan outlined in this article.
