During his 2020 presidential campaign, Democratic nominee Joe Biden proposed the largest tax increase in modern U.S. history.
Voting in the 2020 U.S. Election may be over, but the misinformation keeps on ticking. Never stop fact-checking. Follow our post-election coverage here. During his 2020 presidential campaign, U.S. President Donald Trump on multiple occasions claimed his Democratic opponent Joe Biden would impose the 'biggest tax increase in history' if voters elected him. In an August interview on Fox News, for instance, Trump said of Democrats: They want to tax $4 trillion, going to be the biggest tax increase in history by far. It will triple up records, and they're big taxers. It's just something that won't work. We'll have - you will see a depression, the likes of which you have never seen. In the following weeks, he reiterated the claim - that 'you are going to have the tax increase of your life' if Biden wins the 2020 election - in social media posts and during campaign events, without explaining who would bear the brunt of the alleged hike. Trump tweeted on Oct. 5: Below is an analysis of Biden's tax proposal assessing whether it would indeed raise taxes by an amount never seen before in modern U.S. history, and who would most feel its impact. Who Would Face Higher Taxes Under Biden's Plan? According to his campaign website, Biden ran for president on the promise that he would change multiple aspects of the country's tax system - specifically in regards to individual income and payroll taxes, business taxes, and tax expenditures. The proposed changes would repeal aspects of the 2017 Tax Cuts and Jobs Act, which the Trump administration and Republicans framed as a solution to fuel economic growth ,and Democrats saw as a gift to the country's richest individuals and large corporations at the expense of low-to-middle-class Americans. Specifically, Biden's tax plan would roll back the act's income tax reductions for the country's top bracket of taxpayers, as well as expand that category to include Americans with incomes over $400,000 annually, rather than just those who earn more than $518,400. His proposal would also require that group of top earners to limit deductions and pay an additional Social Security payroll tax, per an analysis by Howard Gleckman, a senior fellow with the nonpartisan Urban-Brookings Tax Policy Center. Millionaires and billionaires would be subject to taxes on long-term capital gains at ordinary - not preferential - income tax rates. Additionally, Biden's plan would increase the top tax rate for corporations from 21% to 28% and impose a 15% minimum tax on companies' book income, according to his campaign website. It would also reduce tax subsidies for commercial real estate and fossil fuels and incentivize renewable energy investments, among other changes. All of that said, the country's richest taxpayers and corporations would cover the majority of Biden's proposed tax increases - not average Americans - both in dollar amounts and as a share of their incomes. But let's look at the anticipated impact at a granular level. All income levels would face some sort of tax burden in 2021 under Biden's plan (we explain more below), though the highest-income households would pay higher income taxes directly and see substantially larger increases than anyone else. Gleckman made the following estimations: His plan would raise taxes on households in the top 1% of the income distribution (those with income more than $837,000) by an average of about $299,000. [...] By contrast, taxpayers in the middle-income quintile (those with income between $52,000 and $93,000) would experience an average tax increase of just $260. [...] Taxpayers in the bottom quintile (those with income less than $26,000) would see an average tax increase of only $30. That added burden on low- and middle-income households -representing about 2% of the proposed change - would be an indirect result of employers shifting the cost of the higher corporate tax rate to some workers. Corporations on a grand scale would slightly lower wages and investment income, which would, on average, more than offset the effects of Biden's new tax credits, the center concluded. Alicyn McLeod, a tax adviser and writer for Accounting Today, said in October 2020: Biden's proposal is primarily motivated by fairness. Many U.S. taxpayers are concerned that large corporations aren't paying their 'fair share.' While understandable, this position ignores the belief among many tax and economic policy experts that a significant portion of corporate taxes are ultimately paid by workers, shareholders, and consumers as opposed to companies themselves. In sum, the overwhelming majority of Americans - those who earn $400,000 or less annually - would not see their taxes increase as a direct result of Biden's tax proposal, and the top 1% earners would shoulder the brunt of his proposed hike. But low-to-middle-class workers would see slightly lower investment returns and wages as a result of corporate tax increases, according to economists' analysis including a a budgetary model by the Wharton School of the University of Pennsylvania. How Does the Proposal Rank Historically? Biden's plan would raise about $3.38 trillion in additional tax revenue over 10 years, according to the university's model. Concurrently, per Gleckman's analysis, that would amount to an increase in federal revenue by about 1.5% of the country's gross domestic product (GDP). GDP is the economy's total output of goods and services, and economists rely on it greatly to measure the economy's health and how fiscal or regulatory policies could impact it - not raw dollar amounts that don't consider inflation and population changes. To determine the legitimacy of Trump's claim, we considered federal tax proposals and their impact on GDP over decades. Of almost two dozen congressional tax bills that increased federal tax revenues between 1940 and 2012, for example, the five largest tax increases raised annual revenue between 1.33% and 5.04% of GDP, according to a 2013 compilation of such records by the U.S. Department of Treasury. The following table compiled by the Tax Foundation, another independent public policy think tank, showed where Biden's plan would stand in comparison to those other proposals: According to those findings, Biden's tax proposal, if enacted by Congress, would amount to the fifth-largest tax increase since the 1940s - not the biggest hike in modern U.S. history. 
In sum, the overwhelming majority of Americans - those who earn $400,000 or less annually - would not see their taxes increase as a direct result of Biden's tax proposal, and the top 1% earners would shoulder the brunt of his proposed hike. But low-to-middle-class workers would see slightly lower investment returns and wages as a result of corporate tax increases, according to economists' analysis including a a budgetary model by the Wharton School of the University of Pennsylvania. How Does the Proposal Rank Historically? Biden's plan would raise about $3.38 trillion in additional tax revenue over 10 years, according to the university's model. Concurrently, per Gleckman's analysis, that would amount to an increase in federal revenue by about 1.5% of the country's gross domestic product (GDP). GDP is the economy's total output of goods and services, and economists rely on it greatly to measure the economy's health and how fiscal or regulatory policies could impact it - not raw dollar amounts that don't consider inflation and population changes. To determine the legitimacy of Trump's claim, we considered federal tax proposals and their impact on GDP over decades. Of almost two dozen congressional tax bills that increased federal tax revenues between 1940 and 2012, for example, the five largest tax increases raised annual revenue between 1.33% and 5.04% of GDP, according to a 2013 compilation of such records by the U.S. Department of Treasury. The following table compiled by the Tax Foundation, another independent public policy think tank, showed where Biden's plan would stand in comparison to those other proposals: According to those findings, Biden's tax proposal, if enacted by Congress, would amount to the fifth-largest tax increase since the 1940s - not the biggest hike in modern U.S. history. 
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