Average tax rate for high earners will go up under Biden’s Build Back Better bill

President Joe Biden has been struggling for months to get his massive Build Back Better spending bill passed by lawmakers on Capitol Hill.

His job may have just become much more difficult, as The Hill reported this week that the legislation will reverse some major sections of former President Donald Trump’s 2017 tax cuts. 

The outlet cited a report released Tuesday by the Joint Committee on Taxation which found that households with an income of at least $1 million will see their taxes go up next year if the legislation passes.

Conflicting info

Whereas the average tax rate for those particular earners currently stands at 29.9%, the Democratic proposal would see that figure increase to 33.1%.

This estimate corrects an earlier report that stated their average tax rate would see a slight decrease, declining from 29.9% to 28.2%.

That specific finding caught the attention of some right-leaning tax experts. However, the committee said Tuesday that it had initially made an error in calculating the average tax rates for 2022.

In response, White House Chief of Staff Ron Klain took to Twitter and touted news that high-income earners will pay may more to the Internal Revenue Service (IRS) if the Build Back Better initiative is passed.

Higher SALT deduction

However, The Hill noted that another provision of the bill increases the cap on the state and local tax (SALT) deduction from $10,000 to $80,000.

The move will disproportionately benefit high-income earners in blue states, such as New York and New Jersey, as those jurisdictions tend to have much higher state and local tax burdens.

Conservatives have long complained that the SALT deduction is unfair because it gives an unfair break to wealthy residents in the dark blue states.

“Blue state Democrats have been fighting to bring back the ability for wealthy residents of high-tax jurisdictions to deduct their state and local taxes from their federal bill,” Philip Klein noted in the National Review earlier this month.

“For decades, it was a destructive policy that forced residents of low-tax states to effectively subsidize the tax and spend policies of more liberal states,” Klein added.

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