New analysis warns that the US will have the highest income tax rate among developed countries under the Biden plan – News Couple

New analysis warns that the US will have the highest income tax rate among developed countries under the Biden plan

Nobel Prize-winning economist Milton Friedman famously quipped that there is no such thing as a free lunch. Well, despite the Biden administration’s rhetorical spin, there is also no such thing as a multibillion-dollar spending plan that costs “zero dollars.” In fact, Biden’s plans include a slew of tax increases to “push” the proposed spending — increases that would leave the United States with the highest income tax rate among developed nations, according to one analysis.

Right-leaning impartial tax corporation check up Updated details of the president’s “building back better” tax proposals. It reviewed the proposed new surcharges for higher earners, suggested that some tax rules be redefined to include more people, and the increases already scheduled in income tax rates. Under this tax system, the Tax Foundation warns that accounting for federal, state, and local taxes, the United States will reach its highest income tax rate of 57.4 percent—meaning, above a certain level of income, roughly 60 cents from every additional dollar earned. You should go to the IRS.

As the chart below shows, the United States would far outperform most other developed nations under the Biden administration’s proposals:

Image Credit: Tax Foundation

There is still some variation at the state level, but in all 50 states and Washington, D.C., the personal income tax rate will exceed 50%. (Even in states like Florida with no state income tax!) The situation will be even more extreme in states like New York and California, where the higher rate will be 66.2% and 64.7%, respectively.

It doesn’t take a genius or an economist to see how this could harm not just the wealthy, but the entire American economy.

“Raising the higher marginal tax rate on ordinary income to the highest level in the OECD would hurt US competitiveness,” Tax Foundation analysts Alex Durant and William McBride Warning. It would also reduce incentives to work, save, invest and innovate, with wide-ranging repercussions for the US economy.

Actually it will be. Simply put, wealthy individuals and companies are less likely to invest in or move to the United States if they face a heavier tax burden than in comparable developed countries. Moreover, confiscated dollars from wealthy Americans are likely to be invested, which means that taxes will draw resources away from productive projects that would lead to new jobs, technologies, and economic activity.

The Biden administration continues to stubbornly claim that its agenda “costs no dollar.” But nothing in life is truly free. Americans should keep the costs of President Biden’s tax proposals first in mind when considering their merits, not just any purported advantages.

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