October 7, 2020

New 50-State Analysis of Biden Revenue-Raising Tax Proposals

news release

Media Contact

A new state-by-state analysis of Democratic presidential candidate Joe Biden’s proposal to raise taxes for filers with income of more than $400,000 finds that in 2022, just 1.9 percent of all taxpayers would face a direct tax increase, meaning an increase in their personal income or payroll taxes. This would vary only slightly by state. For example, in West Virginia, 0.6 percent of taxpayers would see an increase, and in Connecticut, 3.7 percent of taxpayers’ taxes would increase.

More specifically, 97 percent of this increase would fall on the top 1 percent. Their average increase would be about $174,000 in tax year 2022. Virtually all the rest of the increase would fall on the next richest 4 percent. The personal tax increases and payroll tax increases in Biden’s plan would raise $209 billion in 2022 from just 1.9 percent of taxpayers.

“This analysis helps set the record straight about the revenue-raising components of Biden’s tax plan,” said Steve Wamhoff, director of federal policy at the Institute on Taxation and Economic Policy. “Only 1.9 percent of taxpayers will see their income taxes or payroll taxes rise under Biden’s plan, and they will certainly not be the Americans who face eviction, lack health insurance, and wonder when they can go back to work.”

ITEP’s distributional analysis includes Biden’s proposal to increase personal income taxes and payroll taxes. Personal income tax increases include rolling back parts of the 2017 Trump tax cuts (related to top tax rates, limits on deductions, and the deduction for pass-through businesses) for those with taxable income exceeding $400,000. Biden’s plan would further limit itemized deductions for these taxpayers and eliminate the lower rate for capital gains for those with incomes exceeding $1 million. Biden’s payroll tax increase would apply to individual workers earning more than $400,000.

The five states with the lowest share facing a direct tax increase are West Virginia, Mississippi, Arkansas, New Mexico and Kentucky. Less than 1 percent of taxpayers in all these states would face a direct tax increase in tax year 2022. The five states with the highest share facing a direct tax increase are Connecticut, New Jersey, Massachusetts, California and New York (and Washington D.C.). This result is unsurprising. States with more high-income individuals would have a larger share of residents who pay more under Biden’s plan. But even in the richest states, the share with direct tax increases would be less than 4 percent.

Read the report and download state-by-state data

View related data on Biden’s Child Tax Credit expansion