Much of Biden’s plan is based on reversing Republican tax cuts of 2017, which weighed more on those at the top of the income scale, although many important provisions expire after 2025.
Biden has not issued a formal tax proposal since taking office, although he is expected to soon disclose measures to help finance his infrastructure, clean energy and other recovery efforts.
During his search for the White House last year, he released a plan that would increase federal revenues by $ 2.1 trillion over a decade, according to a non-partisan analysis by the Tax Policy Center in November.
Here’s what Biden proposed in the campaign:
Raising the highest federal income tax rate
Biden called for the return of the maximum marginal rate to 39.6% – noting that it was the rate when President George W. Bush, a Republican, was in office. The 2017 tax cut reduced that rate to 37%.
Biden told ABC News that such an increase would raise $ 230 billion, which is almost double the Tax Policy Center’s estimate to raise the rate on those earning about $ 400,000 a year. Such a move would capture some people whose maximum rate is currently 35% and all those in the 37% range, said Howard Gleckman, a senior member of the center.
His proposal would also make two changes that would limit the amount of discriminated deductions for taxpayers above that income limit, which would generate another $ 275 billion, the center concluded.
It is estimated that 1% of those who earn more, for example, will have an average reduction of 15.6% in revenue after taxes in 2022, the center is told.
Increase in capital gains taxes
Those who earn more than $ 1 million annually would have to pay higher taxes on capital gains, which normally represent the largest share of the income of the wealthy, according to Biden’s campaign proposal.
The capital gains of these taxpayers would be subject to the maximum marginal rate for wages and salaries – currently 37%, but rising to 39.6% in its broader plan.
Taxing capital gains at the same rate as income has been a long-standing battle on Capitol Hill, with many Democrats in favor.
Taxation of unrealized capital gains on death
Today, the heirs of wealthy Americans enjoy a huge tax break. Assets that pass directly to them receive an “increase” in their cost base, which means that they are valued on the date of death. This can minimize the collection of taxes on the heirs when they eventually sell the assets.
Biden would require properties to pay taxes on unrealized gains on those assets.
This measure, together with the increase in the capital gains tax rate, would raise $ 370 billion in 10 years, according to the Tax Policy Center.
Raising the payroll taxes of the rich
As part of his campaign platform, Biden wanted to subject salaries of more than $ 400,000 to Social Security payroll tax, which is currently limited to $ 142,800 for 2021.
Workers and their employers each pay 6.2% of wages to cover Social Security. Biden’s provision would create a donut hole, with earnings below the limit and above the new limit subject to payroll tax.
This would raise $ 740 billion over a decade.
Boosting the Federal Property Tax
Biden would rewind the property tax policy until 2009, when the federal exemption was $ 3.5 million per person and the rate was 45%.
Previous changes in tax legislation have raised the exclusion to $ 5.5 million and reduced the rate to 40% by 2017. Republican tax cuts have greatly increased the exemption, which is now $ 11.7 million per person in 2021 , and maintained the 40% rate.
Changes in real estate taxes would bring in additional revenue of $ 218 billion, according to the Tax Policy Center.
Increased corporate taxes
Biden would revert part of the 2017 tax cuts to the corporate income tax rate. It would rise to 28%, up from the current 21%, but not as high as the maximum rate of 35% that existed before the Republican tax exemptions.
Its campaign platform also called for the imposition of a more aggressive minimum tax on multinational companies and the taxation of accounting revenue reported to shareholders, not revenue reported to the IRS, among other measures.
These corporate tax increases are the biggest component of Biden’s campaign proposal, raising about $ 1.3 trillion in revenue over a decade.
Here is the impact on those who earn less than $ 400,000
During the interview with ABC News, Biden reiterated his promise not to raise taxes on anyone earning less than $ 400,000 a year – a statement he made several times during his campaign. This would cover about 90% of taxpayers.
An analysis of Biden’s campaign proposals by the Tax Policy Center, as well as models from the Committee on Responsible Federal Budget and Penn Wharton’s Budget Model, concluded that this was true. They show that families earning less than $ 400,000 a year will not see a direct increase in federal taxes.
In fact, middle-income families could have an average tax cut of $ 680 and low-income families could see their tax bills drop by $ 760 in 2022, the center concluded.
But the story is a little different when considering indirect taxes, like the rise in corporate taxes that Biden is proposing. Economists assume that workers will end up paying part of the cost of these taxes. They will not see a higher income tax rate, but their after-tax wages may eventually be lower.
CNN’s Jason Hoffman contributed to this story.