March 31, 2021, the White House released a summary factsheet of the “Made in America Tax Plan,” a tax proposal that would generate revenue to pay for the recent “American Jobs Plan” spending proposal.
In addition, Democratic members of the Senate Finance Committee — including Sens. Wyden, Brown, and Warner — have introduced a separate proposal titled “Overhauling International Taxation.”
President Joe Biden aims to fund expanded education, child care, paid leave and other reforms by collecting more tax revenue from Americans who make more than $400,000 a year.
The richest 1% of taxpayers, who have an average income of $2.2 million, would shoulder the burden of the tax hike, according to an analysis published by the Institute on Taxation and Economic Policy.
Two-thirds of this group would see their taxes increase, by an average $159,000 a year, according to the analysis.
Of course, the proposal faces headwinds in Congress. Passage isn’t guaranteed and parts of the plan may change.
A new top tax rate of 39.6%
Biden’s tax plan would raise the top income tax rate to 39.6%.
That was the highest rate before the 2017 Tax Cuts and Jobs Act, which lowered it to the current 37%.
The 39.6% rate would apply to the top 1% of Americans, according to the White House.
Households with more than roughly $540,000 of income fall among the wealthiest 1% of taxpayers, according to Garrett Watson, a senior policy analyst at the Tax Foundation.
However, the precise income thresholds at which the 39.6% rate would kick in for single taxpayers and married joint filers are unclear.