Biden Spending Bill Would Raise Tax Rate for Households Above $1M: JCT

Biden Spending Bill Would Raise Tax Rate for Households Above $1M: JCT road signs reading build back better pointing in all different directions (Jon Anders Wiken/AP)

By Charlie McCarthy | Tuesday, 23 November 2021 06:27 PM

A corrected report by the Joint Committee on Taxation said Tuesday that House Democrats' social spending and climate bill would result in households with income of at least $1 million seeing a tax increase, not a decrease as previously stated.

The average tax rate for taxpayers in that bracket would increase from 29.9% to 33.1% in 2022, the JCT said in its corrected report.

Congress' nonpartisan tax scorekeeper originally released a report Friday saying the average 2022 rate for taxpayers with income of at least $1 million would decrease slightly, to 28.2%.

White House chief of staff Ronald Klain replied to a tweet by NBC News reporter Sahil Kapur about the JCT correction.

"Um, yes," Klain tweeted.

The House on Friday voted to pass President Joe Biden's $2 trillion "Build Back Better" social spending and climate legislation.

The Hill reported the bill included several provisions aimed at increasing taxes on high-income households, including a surtax that would apply to households' income above $10 million.

However, several think tanks estimated high-income households would benefit from a provision to increase the cap on the state and local tax (SALT) deduction from $10,000 to $80,000.

Sen. Bernie Sanders, I-Vt., on Thursday said changes to the state and local tax deduction in the spending plan amounted to "large tax breaks to millionaires."

The Urban-Brookings Tax Policy Center has estimated about two-thirds of taxpayers in the top 1% of income — those with income of above $885,000 — would get a tax cut in 2022 under the bill.

"The House version of the Build Back Better legislation includes major changes to the tax code," the Tax Policy Center tweeted Friday. "Most of the tax increases would fall on the top 1% of earners, while lower-income households would see a noticeable tax cut on average."

The bill passed by the House now heads to the Senate, where it is expected to undergo changes.

The Hill reported key Democrat senators were working on an alternative proposal on the SALT deduction that would focus changes to the cap on households with income under a level between $400,000 and $550,000.

House Minority Leader Kevin McCarthy, R-Calif., last week delivered an 8-hour, 32-minute attack on the Build Back Better Bill, delaying a vote on it — the longest speech in House-floor history.

"What we really found was … big government socialism isn't working," McCarthy told Fox News on Sunday. "It is not working when we have the highest inflation in 31 years.

"These gas prices — the big government cripples American industry but begs OPEC and Russia to produce more. When our military is focused on woke-ism instead of defeating and winning and keeping up with China. We watched our attorney general now in a big government socialism, turns and goes after parents. …

"That's what drove me to keep talking [against the Build Back Better bill]. So the American people could understand."