Biden Tax Hikes Will Make Tax Day Harder for Workers, Families, Small Businesses
Today on Tax Day, for a third year in a row, Americans will again have an easier time filing their taxes thanks to Republicans’ Tax Cuts and Jobs Act (TCJA).
Unfortunately, President Biden pledged to repeal the entirety of that law—creating tax filing headaches for millions of Americans and reversing the tax cuts that help workers, families, and small businesses. Biden’s list of potential tax increases would harm low- and middle-income workers, small businesses, and seniors who rely on savings and Social Security.
Here’s how Republican tax policies have made tax filing season easier (and what President Biden could take away):
- Lower Tax Rates Across the Board: Even the New York Times reported back in 2019 that you probably got a tax cut under TCJA.
- Easier Tax Filing: Republicans nearly doubled the standard deduction, which means nine out of 10 Americans don’t need to go through the complicated process of itemizing deductions.
- Doubled Child Tax Credit: In 2019, over 39 million families benefited from TCJA’s doubled child tax credit, receiving an average of $2,200 per family.
- Better Savings Options for Education with Expanded 529 Accounts: Thanks to TCJA, 529 plans can now be used to pay for up to $10,000 of annual tuition expenses to attend public, private, or religious elementary or secondary schools. And the bipartisan SECURE Act strengthened this reform to allow these accounts to be used for student loans and apprenticeship programs.
- No Favoring Wealthy Individuals Over Rural Families: Republicans rolled back a big tax benefit for the wealthy by capping their deductions for state and local taxes. Democrats hope to repeal the cap, providing a big subsidy to the wealthy while providing virtually no benefit to rural America.
- Greater Flexibility for New Parents: Millions of parents are now able to borrow from their savings plan to pay for expenses related to birth or adoption.
- Help with Health and Child Care Expenses: At the end of 2020, Republicans pushed to make flexible spending accounts and dependent care flexible savings accounts more generous and easier to use through 2021.
President Biden’s threat to eliminate all of TCJA presents real harm to families. Here’s what would happen:
- A family of four earning the median income of $73,000 would see a $2,000 tax increase.
- A single parent (with one child) making $41,000 would see a $1,300 tax increase.
- Millions of families would see direct tax increases:
- Their child tax credit would be cut in half.
- Their standard deduction would be cut in half, raising their taxes and creating filing headaches as they are forced to itemize deductions and deal with a shoebox full of receipts on top of the refrigerator.
- The AMT would snap back to hit millions of households.
- Millions of low and middle-income households would be stuck paying the Affordable Care Act individual mandate tax.
- Utility bills would go up in all 50 states as a direct result of unwinding TCJA tax cuts.
- Small employers would face a tax increase due to the repeal of the 20 percent deduction for small business income.
- American companies would be stuck with the highest corporate income tax rate in the developed world.
- Taxes would rise in every state and every congressional district.
- The Death Tax would ensnare more farms and other family businesses.
Tax reform got real results and American workers came first.
- Main Street Optimism Reached An All-Time High. In the third quarter of 2018, small businesses recorded their highest level of optimism to date.
- Opportunities For All Americans Flourished. The unemployment rate reached a generational low, with record low unemployment for women, people of color, and workers without high school degrees.
- Jobs Added to the Economy. After enactment of TCJA, the pre-pandemic economy gained nearly 5 million jobs.
- Businesses Started to Reinvest Again. Core investments in equipment and other business necessities reversed an Obama-era five-year downward trend and shot back up to near historic highs making businesses and workers more productive, while boosting workers’ wages.
- Business Applications At Record Levels. TCJA encouraged business creation as the amount of business applications reached its highest level ever of over 880,000.
- Millions of Hours Saved. Nearly nine out of 10 Americans took the standard deduction in 2019, no longer needing to go through the complicated process of itemizing.
- Revenues Soared. Disproving critics’ dire predictions, federal revenues reached an all-time high, due to more Americans working, bigger paychecks, and businesses expanding.
- Workers’ Net Worth Soared. Low- and middle-class families saw the largest gains in wealth growth in 2018 and 2019, according to the Federal Reserve. Low-income families saw their net worth increase 37 percent. Middle-class families saw their net worth increase 40 percent.
- Household Income Reached New Highs. Real median U.S. household income in 2019 rose nearly 50 percent more than during the eight years of Barack Obama’s Presidency. Median household incomes increased 7.1 percent for Hispanics, 7.9 percent for Blacks, 10.6 percent for Asian Americans and 8.5 percent for foreign-born workers.
- Wages for Minorities Grew at a Faster Pace. Compared to Obama’s second term, wages* grew 24 percent faster for Hispanics, 79 percent faster for Blacks, and 95 percent faster for Asian Americans.
- Wages for Women Grew at a Faster Pace. Compared to Obama’s second term, wages* grew 60 percent faster for women.
- Wages for Youths (Ages 16-24) Grew at a Faster Pace. Compared to Obama’s second term, wages* grew 70 percent faster for young workers.
- Wages for All Levels of Educational Attainment Grew at a Faster Pace. Compared to Obama’s second term, wages* more than doubled for those with less than a high school diploma and those with either some college or have an associate degree.
*Wage growth as a measure of median usual weekly earnings.