Report Finds Build Back Better May Hike Taxes on Middle-Class

tax increase

If you’re anything like us, we have been wondering just how President Biden’s pledge that no American earning less than $400,000 would pay “a single penny” in additional taxes due to the Build Back Better agenda would be realistically possible.

We’ve heard this repeated many times since the plan’s proposal, and, just as we thought, new estimates project it may indeed be a false statement.

According to an analysis recently published by the non-partisan Tax Policy Center, roughly 20% to 30% of middle-income households would pay more in taxes in 2022.

When looking only at direct taxes such as individual income taxes and payroll taxes, the plan would cut 2022 taxes on average for every income group except those in the top 1%.

Those who make about $885,000 or more would pay about $55,000 more than under current law.

But further analysis shows that when you take into account all major tax provisions, low and middle-income households would also be paying an additional amount.

Families making between $200,000 and $500,000 would have an average of $100 to $230 less in after-tax income.

Although the tax increase would be small (which to us is a subjective word), the fact that we were promised one thing with certainty all this time, Americans could be in for a revelation.

However, this is only accounting for one of the portions of the proposed tax hikes in the bill, as there are more to come.

2023 Tax Increases

The analysis found that the tax picture would change in 2023, which expands Child Tax Credits only through 2022.

In addition, one of the major tax increases in the bill, the corporate minimum tax on book income, isn’t scheduled to take effect until 2023.

The Tax Policy Center states:

“In general, the combined effects of these changes would result in many households paying higher taxes in 2023 than in 2022. They would shrink the average 2023 tax cuts for low-income households, raise taxes slightly for moderate-income households, and increase taxes significantly for the highest-income households.”

Again, although the tax increases may seem like it’s not much, anything additional certainly adds up over time.

This comes at a time where our inflation has reached levels unseen in over 30 years.

Despite the plan possibly seeing revisions before becoming official, one key factor remains: the Build Back Better agenda could raise overall taxes on almost all households in the coming years.

Do you have a plan in place to protect your hard-earned savings and retirement? Call American Hartford Gold at 800-462-0071; we can help.

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