President Joe Biden’s Build Back Better plan would make the United States the highest-taxed country in the developed world if it passes as currently configured, according to the conservative-leaning Tax Foundation.
According to the report, the average top tax rate on personal income in the United Statea would hit 57.4% under the plan, making it the highest in the Organization for Economic Cooperation and Development (OECD). The U.S. is currently 23rd of 38 member countries.
The current top marginal rate at the federal level is 37%. The Build Back Better plan would push every state’s top marginal federal level above 50%, with most states having a higher rate than that. With the average state tax rate at 6%, the Tax Foundation arrived at the 57.4% figure.
The marginal rate applies only to those making more than $500,000 a year. Eight states and the District of Columbia would have top rates over 60% under the plan, and residents of California would pay the most at 64.7%, followed by New Yorkers at 66.2%
Also, wealthy Americans would be hit with a 5% surcharge on modified adjusted gross income (MAGI) over $10 million, in addition to a 3% charge on MAGI over $25 million, the study shows.
Wealthy taxpayers would lose the ability to avoid the 3.8% Medicare surtax. The plan would also increase IRS enforcement action against wealthy tax cheats.
Large corporations would see a 15% minimum tax and 1% surcharge on corporate stock buybacks.
The Penn Wharton Budget Model, based at the Wharton School of Business at the University of Pennsylvania, estimates the plan would cost $1.87 trillion while raising $1.56 trillion over 10 years, the Daily Mail reports.
Democrats assert that the plan would cost $1.75 trillion over 10 years and raise $2 trillion in revenue.
”As policymakers explore options to raise revenue, they should keep in mind how the U.S. compares to other countries and what the economic effects might be,” write Alex Durante and William McBride of the Tax Foundation.
”Raising the top marginal tax rate on ordinary income to the highest in the OECD will damage U.S. competitiveness. It will also reduce incentives to work, save, invest, and innovate, with broad implications for the U.S. economy.”