The Median Household Will Pay More under Biden-Harris Tax Plan

No one can doubt that Joe Biden plans to raise taxes on households earning over $400,000. The question is how the Biden-Harris tax plan, if implemented, would affect households earning less than $400,000. On cue, during last Wednesday’s debate, Senator Harris and Vice President Biden sparred over the subject.

The answer? Most households would face a tax increase under the Biden-Harris tax plan. In fact, as the chart shows, unless your household income is less than $45,600, there is more than a 90 percent chance that the Biden-Harris plan, if enacted, will raise your taxes. In the exact middle of the household income distribution, over 95 percent of households can expect a tax increase if the Biden-Harris plan becomes law. Overall, 82.6 percent of American households can expect a tax increase.

These estimates come from the Penn Wharton Budget Model at the University of Pennsylvania’s Wharton School of Business, not exactly a friend of President Trump’s economic agenda.

When I was at President Trump’s White House Council of Economic Advisers, in fact, we explicitly criticized the Penn Wharton Budget Model’s estimates of the effects of the 2017 Tax Cuts and Jobs Act. If the Penn Wharton Budget Model produces estimates inconvenient for the Biden-Harris agenda, then, they’re likely to be inconvenient truths. Not results of cherry-picked assumptions.

These estimates — produced in March 2020 as part of an analysis of the Biden-Harris tax agenda — were updated in September 2020 with a comprehensive look at the entire Biden-Harris economic agenda. The “updated” analysis, however, did not include estimates specifically of how many households in each income quintile faced tax increases. At least none that the public can see.

By all indications, however, there is no reason to expect March 2020’s numbers on households facing tax hikes under the Biden-Harris plan to have changed by September 2020. The specific provisions that drove these estimates in March 2020 were still there in September. The numbers also, it seems, line up. In March, they estimated that the plan would raise between $3.1 and $3.7 trillion in revenue over 10 years. In September, they estimated that the plan over 10 years would raise $3.4 trillion — the exact midpoint that represents the average of $3.1 and $3.7 trillion. At the quintile level, Penn Wharton changed its verbiage for describing average tax hikes between March and September. So far as I can discern red from orange and compare apples to apples, however, the tax hikes for each quintile in September’s analysis are within a tenth of a percentage point of what was reported in March. So what’s under the hood of September’s estimate appears more-or-less identical to what was there in March.