Analysis: Biden Tax Hikes Hit Middle Class
Joint Committee on Taxation (JCT) Analysis Shows Corporate Tax Increase Breaks Biden’s Tax Pledge
Washington, D.C.--Today, U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and U.S. House Ways and Means Ranking Member Kevin Brady (R-Texas) released an analysis showing that proposed corporate tax hikes would fall directly on middle-class Americans. The analysis, performed by the non-partisan Joint Committee on Taxation (JCT), shows that increasing the corporate tax burden would disproportionately harm U.S. workers, retirees and small businesses, including 1.4 million small business C corporations and the 98 percent of Americans who earn less than $500,000.
“This study supports what we’ve long known--corporate tax hikes are primarily borne by workers and retirees, and certainly the middle class/those making well below $400,000 a year,” said Crapo and Brady. “America’s health and economic recovery remain very fragile, and may get worse again before getting better. Unemployment is still too high and inflation is a real concern. Now is not the time to raise taxes on the very people we are asking to lead us out of this crisis.”
Key points from the analysis:
Increasing the corporate tax burden would disproportionately harm U.S. workers, retirees and small businesses.
- Within 10 years of a corporate tax increase from 21 percent to 25 percent, 66.3 percent of the corporate tax burden would be borne by lower- and middle-income taxpayers with income well below $500,000.
- This statistic becomes only more striking in absolute number of taxpayers. Of the more than 172 million taxpayers who would bear the burden of the increased corporate tax rate, 98.4 percent, or about 169 million, have incomes under $500,000.
- Separate analysis shows that corporate tax increases would hit 1.4 million small businesses organized as “C corporations.”
Middle-income Americans--not just the wealthy--have a stake in the financial success of U.S. corporations.
- Of the portion of U.S. corporate ownership (stocks, bonds, pensions, IRAs and other retirement accounts) held by U.S. taxpayers, there are about 107.8 million U.S. taxpayers who have some ownership stake in U.S. corporations.
- Of those 107.8 million U.S. taxpayers with a taxable holding of U.S. corporate equities and bonds, about 97.7 percent, or about 105 million, earn $500,000 or less a year.
The tax burden on the over 98 percent of Americans who make less than $500,000 per year will increase over time.
- In dollar terms, for 2022, a corporate rate increase to 25 percent would raise revenues from U.S. taxpayers by $27.7 billion, and about 57 percent of that additional revenue ($15.8 billion) would come from taxpayers earning less than $500,000 per year.
- Of the $40.4 billion in increased corporate tax burden in the U.S. in 2031, 66.3 percent of the burden of the increase (or $26.8 billion) will be borne by lower- and middle-income taxpayers with income under $500,000.
- The Left-leaning Tax Policy Center has already shown that Democrats’ tax increases would fall on the middle class.
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