Build Back Better Makes U.S. Income Tax Rate Highest in Developed World

Disaster! Millions of Americans made the worst mistake of their voting life, when they voted for Joe Biden thinking they would get a moderate. Now America is paying the price. Literally. How do President Trump’s tweets look now?

Build Back Better would make US income tax rate highest in developed world

By New York Post, November 17, 2021

President Biden’s Build Back Better agenda would hike the average top tax rate on personal income in the United States to the highest level in the developed world, according to an analysis by the Tax Foundation.

The $1.75 trillion proposal currently before the House of Representatives would end up raising the average top tax rate on personal income in the US to a whopping 57.4 percent, the highest in the 38-member Organisation for Economic Co-operation and Development, according to the analysis.

That’s up from the US’ current nationwide average top tax rate of 42.9 percent, which lands squarely in the middle when compared with the other OECD countries, according to the Tax Foundation, a Washington, DC-based think tank.

The new rate under Biden’s proposal would push the US top tax rate even higher than Japan’s notoriously cumbersome

CLICK HERE FOR CHARTE OF GLOBAL TAX RATES SHOWING THE U.S. WITH HIGHEST RATE OF 57.4%

Biden’s Build Back Better top tax rate would overtake Japan, Denmark, and France – currently the three countries with the highest tax rates in the OECD.

The top tax rate in a handful of blue states, including New York, California and New Jersey, would be even higher than the nationwide average at 66.2 percent, 64.7 percent and 63.2 percent, respectively, according to the analysis.

But under Biden’s plan, even residents of low-tax states like Wyoming, Washington and Texas will still face a top income tax rate of at least 51.4 percent due to the federal levy, the analysis shows.

A few different factors would drive the average top income tax higher, according to the analysts at the Tax Foundation.

First, under current law, the top marginal tax rate on ordinary income is scheduled to increase from 37 percent to 39.6 percent starting in 2026, according to the Tax Foundation.

The US has a marginal tax rate, meaning that tax rate only applies to earnings above the top threshold, which is above half a million dollars a year per household.

Analysis shows that low-tax states like Wyoming and Texas will still face a top income tax rate of at least 51.4 percent under President Biden’s plan.

On top of that, the wealthiest US households would face a 5 percent surcharge on modified adjusted gross income (MAGI) above $10 million, plus a 3 percent charge on MAGI above $25 million, according to the analysis.

The plan would also close provisions that allow some wealthy taxpayers to avoid the 3.8 percent Medicare surtax on their earnings by strengthening a net investment income tax for anyone earning more than $400,000 a year.

Overall, these factors would push the top marginal tax rate on personal income at the federal level to 51.4 percent, according to the Tax Foundation, and that’s before state income tax.

It’s still unclear if the contentious cap on state and local tax deductions will be lifted in the Build Back Better plan, but if it is, then the average top marginal income tax rate would fall slightly to 54 percent, according to the foundation.

CLICK HERE TO VIEW MAP OF TOP TAX RATES IN U.S. BY STATE.

Under Build Back Better, even low-tax states would face major rate hikes.

“As policymakers explore options to raise revenue, they should keep in mind how the US compares to other countries and what the economic effects might be,” the analysis said.

“Raising the top marginal tax rate on ordinary income to the highest in the OECD will damage US competitiveness. It will also reduce incentives to work, save, invest, and innovate, with broad implications for the U.S. economy.”

EDITORS NOTE: This Geller Report column is republished with permission. ©All rights reserved.

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