Joe Biden’s economic plan would impose higher taxes on top earners and corporations to pay for investments in education, infrastructure and other domestic programs, according to a new analysis.
The plan would increase taxes by $3.375 trillion, not enough to pay for a planned $5.35 trillion spending spree, according to the Penn Wharton Budget Model. Much of the burden would be borne by those in the very top income brackets, while households that make $400,000 a year or less would not see a direct tax increase, the analysis finds. .
Overall, Biden’s proposed economic policies would increase the national debt slightly in the short term while decreasing it in the long term.
The Trump campaign has run ads and crafted messaging warning middle class households that Biden’s plans would result in a significant increase in their taxes. But the analysis shows that the effects of Biden’s plans on the majority of Americans would be slight. Though they will not see a tax increase, households making $400,000 or less would likely see a 0.9% dip in after-tax wages and investment returns because of corporate tax increases, according to the model.
That stands in direct contrast to the economic priorities of the Trump administration, which early in its tenure secured a $1.5 trillion tax cut that favored corporations and the rich. More recently, the budget Trump unveiled in February took aim at numerous domestic spending programs. Trump has also floated the idea of another tax cut.
The model found that the top 1% of earners, or those who make more than about $710,000 a year, would shoulder 80% of tax increases under Biden’s plan. Of that bracket, those in the top 0.1%, who make more than about $3.3 million a year, would see the biggest hike, paying 43% in taxes, including the distribution of corporate taxes. Those earners currently pay 30.6% in overall taxes.
Biden’s plans also call for an increase in capital gains tax and taxes on corporations.
Because spending will still outstrip the revenue from higher taxes, Biden’s economic plan
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would increase the federal debt by 0.1% by 2030, before pushing the debt down by 1.9% by 2040 and then by 6.1% by 2050, according to the model. National gross domestic product similarly dips modestly by 2030, before holding steady in 2040 and increasing 0.8% by 2050.
The largest areas of new net spending under Biden’s plan would be education, infrastructure and research and development.
Biden’s broad education plan calls for $1.9 trillion in education spending over the next 10 years, including provisions for universal pre-K, two years of debt-free college, free public college for students from low-income families and expanded funding for Title I schools, among other initiatives.
Biden’s plans call for another $1.6 trillion in new net spending on infrastructure efforts like high-speed rail, transit, water infrastructure and research and development on efforts like clean energy, 5G and artificial intelligence.