Joe Biden’s proposed tax plan would result in California having the highest combined top state and local tax rates (SALT) in the US, according to a leading free market think tank.
An analysis by the Tax Foundation found that the next highest tax rates would be found in Hawaii, followed by New Jersey, Oregon and Minnesota.
According to the Democratic candidates’ official campaign website, Biden plans a dozen middle-class tax cuts and will “require corporations and the wealthiest Americans to finally pay their fair share” through measures such as raising the corporate tax rate to 28 percent and a maximum income for individuals to 39.6 percent.
The analysis examined how such measures would affect marginal tax rates. These only apply to part of an individual’s taxable income, with different tax rates applying to each part.
The Tax Foundation said such tax policies would result in the combined upper marginal SALT rate in California (62.64 percent), Hawaii (60.34 percent) and New Jersey (60.09 percent) and New York City (62.03 percent) would exceed 60 percent in Washington, DC (58.29) the rate would be just under 60 percent.
Marginal and average tax rates – how it works differ
A taxpayer’s average tax rate (or effective tax rate) is the proportion of income that he or she pays in taxes. In contrast, a taxpayer’s marginal tax rate is the tax rate levied on their last dollar of income. Taxpayers’ average tax rates are lower—usually much lower—than their marginal tax rates.
Source: Center for Budget and Policy Priorities (CBPP)
The Washington, DC-based foundation said combined marginal tax rates under Biden’s released tax plan, which does not include the removal of the SALT withholding cap, are the highest since the 1986 tax reform act, which lowered the cap on the individual tax rate from 50 percent to 28 Percent.
“In 1986, before the provisions of the 1986 Tax Reform Act went into effect, seven states and the District of Columbia had combined top marginal rates higher than that of California under the Biden plan, led by New York with a combined 63, 9 percent,” the foundation said.
Under Biden’s tax plan, “all-in federal tax rates would be the highest since 1981,” he added.
5 states with highest combined upper limit SALT rates under Biden’s tax plan
(without SALT deduction cap applied)
Source: Tax Foundation
- California: 62.64 percent
- Hawaii: 60.34 percent; 57.26 percent
- New Jersey: 60.09 percent
- Oregon: 59.24 percent
- Minnesota: 59.19 percent
Biden also plans to expand the country’s current child tax credit, which allows individuals to potentially reduce their federal income taxes by up to $2,000 for each qualifying child.
According to his campaign website: “As President, he [Biden] supports a significant expansion of the Child Tax Credit (CTC) for the duration of the [COVID-19] Crisis.
The Democratic nominee has also proposed tax credits for families facing several other costs, including health insurance, childcare, caring for an aging loved one and first-time home purchases.
The 2020 presidential election is a week away on November 3rd.
Biden is expected to lead President Donald Trump in Wisconsin, Pennsylvania, Michigan, North Carolina, Florida and Arizona — six key states, according to the latest online Reuters/Ipsos polls of likely voters released Monday.
The surveys were each conducted among around 1,000 adults and each had a credibility interval of four percentage points. Elections in Wisconsin and Pennsylvania were conducted on October 20-26, while elections in Florida, Michigan, and North Carolina were conducted on October 14-20. Arizona elections were held October 14-21.
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