President Biden has been blasted for claiming the wealthiest families in America pay an average of 8.2 per cent of income tax as he seeks ...
President Biden has been blasted for claiming the wealthiest families in America pay an average of 8.2 per cent of income tax as he seeks to raise a levy that'll target their stocks and investments.
Biden claimed America's wealthiest 400 families - with a minimum net worth of $2.1 billion, or combined wealth of $1.8 trillion, pay far less than the 14 per cent levied on the average American.
But the New York Times claims Biden's figures are misleading, because they fail to take into account the large amounts these high net worth individuals pay when they sell assets such as stocks and shares which are liable for capital gains tax.
These sales are made sporadically, and therefore do not appear on annual tax returns.
Biden has attacked their alleged tax underpayment while campaigning to dramatically increase capital gains tax, from a top rate of 20 per cent to the same 39.6 percent rate for people with incomes of more than $1million.
That is the same rate he has proposed for top income tax earners.
Top earners are currently charged up to 37 per cent income tax on salaries over $523,000 for single filers, or joint filers on more than $628,000, with Biden looking to raise that top threshold to 39.6 percent.
The president has been accused of skewing the figures as he seeks to push his $3.5trillion reconciliation package through Congress.
The Tax Policy Center in Washington DC, which is not affiliated to any political party, estimated that those condemned by Biden for underpaying actually paid a tax rate of 24 per cent.
President Joe Biden said the wealthiest 400 families in America are paying an average income rate of 8.2 per cent but the Independent Tax Policy Center reported the figure is actually 20 per cent - and it raises questions if Biden is skewing figures to push his $3.5trillion reconciliation package through Congress
That three times more than Biden's most recent estimate, and considerably more than the 14 per cent tax the average American worker pays.
Biden's assertion came via analysis from the Office of Management and Budget and the Council of Economic Advisers, but has been criticized for using a completely different calculation to other tax bodies not affiliated with the federal government.
A spokesman said: 'While we have long known that billionaires don’t pay enough in taxes, the lack of transparency in our tax system means that much less is known about the income tax rate that they do pay.'
Biden himself joined in the chorus of disapproval as he sought to push his reforms last week, saying: 'How is it possible for millionaires and billionaires that can pay a lower rate of tax than teachers, firefighters or law enforcement officers?
'This is our moment to deal working people back into the economy. This is our moment to prove to the American people that their government works for them, not just for the big corporations and those at the very top.'
The analysis estimated that billionaires paid 8.2 per cent of their income to the federal government - a rate is lower than the income tax paid by most Americans, who are taxed in brackets depending on their income (pictured). However, the Tax Policy Center reported that the top one per cent's average tax rate is 27.44 per cent - more than triple what Biden has claimed
Biden's proposal would see the top rate of tax raised to 39.6 per cent on both income - their salaries - and capital gains tax - profits on investments including stocks. Meanwhile, the top rate of capital gains tax is currently 20 per cent, meaning the new proposal would see the amount taken from the most successful investors almost double
Biden's proposal would see the top rate of tax raised to 39.6 per cent on both income - their salaries - and capital gains tax - profits on investments including stocks.
Meanwhile, the top rate of capital gains tax is currently 20 per cent, meaning the new proposal would see the amount taken from the most successful investors almost double.
Federal income tax sits at 37 per cent for those earning more than $518,401 a year for single filers.
Couples are only taxed that rate on income of $622,051 and above.
Meanwhile, federal capital gains tax - the amount deducted from profits earned on stocks and other investments - are capped at 20 per cent for single filers whose investments earned them $441,451 or more.
That jumps slightly for married or joint filers, who only hit the top tax band on profits of $496,601 or more.
The analysis looked at publicly available data from the Office of Management and Budget and the White House Council of Economic Advisers, which said inequality in the tax code is driven largely by wealth, not work.
Last week, Biden tweeted: 'It's time the super-wealthy and big corporations pay their fair share in taxes.'
The tweet came a day after Congresswoman Alexandra Ocasio-Cortez was slammed for attending the $35,000-a-head Met Gala donning a dress that read: 'Tax the rich.'
Two hours later, Biden tweeted again, this time referencing his $3.5trillion proposed legislation, which House and Senate Democrats aim to pass into law by the month's end.
'To be clear: If you make under 400k, my Build Back Better Agenda won’t raise your taxes a cent.
'Not only that — you’ll get a historic tax cut, and see lower costs on things like child care and health care. And all of it will be paid for by the wealthy paying their fair share,' he said.
Biden took to Twitter last week to share his thoughts on taxing America's rich
If the proposal makes it through Congress, it will raise taxes on people and corporations making over $400,000 per year back to 39.6 per cent from the current 37 per cent.
Single filers will have to make more than $523,600 each year starting in 2022 to be taxed the top federal rate. Heads of household would have to make $425,000 and a married joint $450,000, according to the House Ways and Means Committee.
Biden's tweets came after Congresswoman Alexandra Ocasio-Cortez was slammed for attending the $35,000-a-head Met Gala donning a dress that read: 'Tax the rich'
Households making more than $1million annually will be taxed the same amount - 39.6 per cent - on their capital gains. It's a hefty increase from the current 20 per cent.
Biden has also called for closing the loophole that allows wealthy Americans to inherit gains, as reported by CBS.
The bill has been progressives' top priority as it focuses on helping families and combating climate change. It is currently in the process of markup and reconciliation but even among Democrats there is a disagreement over Biden's plan.
House Democrats have instead proposed raising the top capital gains rate from 20 to 25 per cent - only five per cent more versus the nearly 10 that Biden proposed.
They also suggested a three per cent surtax be placed on single taxpayers making more than $5million but did not address the topic of passing wealth down generations, CBS reported.
Most recently, Senator Joe Manchin, the most moderate Democrat in the Senate, said that he could not support the expensive reconciliation as it stands.
The Senate later passed a bipartisan version of the infrastructure bill last month with a price tag of $1.2trillion, which Democrats in the House said they wouldn't approve without approval of the $3.5trillion reconciliation package first.
Democratic Senator Joe Manchin doubled-down and said he won't back his party's $3.5trillion reconciliation package as progressives say they won't vote through the $1.2trillion infrastructure bill without its passage
Republicans have refused to raise the debt ceiling because of the Biden administration's trillion dollars worth of spending plans. Moody's said the spending limit 'has failed' at its job and instead 'has become highly disruptive to the fiscal process,' thus causing legislation to simply ignore the debt ceiling for increased periods of time
A report published by Moody's Analytics on Tuesday noted that if Manchin does not budge, Congress could be at a deadlock where neither of the massive pieces of legislation will get through.
Moody's found that the worst case scenario would be if Congress didn't act to lift the debt ceiling and the stalemate carried on, forcing the federal government to delay its billions in debts to Social Security recipients, veterans and active-duty military to November 1.
Moody's explained: 'The original intent of the debt limit was to be a forcing mechanism on lawmakers to remain fiscally disciplined.'
But the debt ceiling is proving that 'it has failed' at its job and instead 'has become highly disruptive to the fiscal process,' thus causing legislation to simply ignore the debt ceiling for increased periods of time.
The result is the US defaulting on its debt payments, which would be a 'catastrophic blow' to Covid-19 economic recovery and result in the loss of six million jobs, according Moody's latest analytics.
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