Biden Plan Would Cut Taxes for Most, New Analysis Finds

Biden Plan Would Cut Taxes for Most, New Analysis Finds

By Yuval Rosenberg and Michael Rainey
Thursday, November 11, 2021
Hey, it’s almost Friday! But before we get ahead of ourselves, today is also Veterans Day — and as we express our deepest gratitude to those who served and their families, we can also be thankful that, as The New York Times notes, it’s the first Veterans Day in two decades without troops engaged in an active war. It’s also an appropriate time to point out this troubling Roll Call story highlighting how hunger among servicemembers and veterans is contributing to rising suicide rates for those groups.

Here’s what else you need to know.

Biden’s Build Back Better Plan Would Cut Taxes for Most Households: Analysis

The latest version of President Biden’s Build Back Better bill would provide a tax cut on average to most households in 2022 while increasing taxes on the top 1%, according to a new analysis from the nonpartisan Tax Policy Center.

The top 1% of households — those earning more than $885,000 — would pay roughly $55,000 more per year on average under the proposed changes to the tax code. Those in the top 0.1% ($4 million and higher) would pay about $585,000 more per year on average.

When all major tax provisions — which touch on a variety of areas such as health care coverage and excise taxes — are taken into account, about 20% to 30% of middle-income households would see a small tax increase in 2022, totaling less than $100 on average. Higher-income households earning $200,000 to $500,000 would pay about $230 more.

Considering just direct taxes, less than 0.1% of households earning less than $500,000 would see a tax hike in 2022, though the picture changes in 2023, when some tax provisions expire and some kick in, resulting in many households seeing a tax increase relative to 2022. (TPC notes that “analyzing the House Democrats’ plan is especially complicated because the effective dates of its many tax provisions vary widely.”)

TPC also points out an odd quirk in the Democratic proposal related to the state and local tax (SALT) deduction. In its most recent iteration, the plan would raise the cap on the SALT deduction to $80,000 from 2021 to 2031, which would provide the majority of high-income households with an overall tax cut. Households earning between $500,000 and $1 million a year would end up getting a $6,130 tax cut on average in 2022, according to one TPC table, while those earning more than $1 million would receive a tax cut of $68,300.

“Thanks to the SALT cap increase, over two-thirds of millionaires will get a TAX CUT under Build Back Better,” tweeted Marc Goldwein of the Committee for a Responsible Federal Budget.

Whether that tax provision makes it into the final legislation remains to be seen.

The bottom line: “While the latest version of Biden’s signature initiative drops or revises many of his original proposals, it still reflects one key goal,” says TPC’s Howard Gleckman. “It would raise taxes on high income households and corporations while reducing, or at least not raising, taxes for the vast majority of low- and moderate-income households.”

Quotes of the Day

“Biden’s original tax proposals were progressive; they raised a lot of money from the top end; they were efficient and effective without creating new loopholes. Now, it seems we are left grasping at ridiculous revenue-raisers and a bunch of gimmicks.”

Steve Rosenthal of the Tax Policy Center, in a Washington Post article examining how the White House’s initial tax proposals have been whittled down in response to opposition from some Democrats.

“To meet the demands of Sen. Kyrsten Sinema (D-Ariz.), the White House agreed to drop a proposed 3 percent tax on taxpayers earning over $5 million, instead agreeing to target the higher tax to those earning more than $10 million,’ the Post’s Jeff Stein reports. “The Biden administration also agreed to pull a proposed tax in late October targeting 700 billionaires after it faced criticism from a number of top Democrats, including House Speaker Nancy Pelosi (Calif.), who complained in one phone call with senior party officials on Oct. 26 that the plan amounted to a publicity stunt, two people familiar with the matter said. Sen. Joe Manchin (D-W.Va.) also raised substantive objections to the plan.”

Stein adds that a new White House plan to impose a 15% minimum tax on corporations now faces objections from renewable-energy groups who are concerned that it could undermine the desired effect of new tax credits to promote investments in clean energy.

“It’s such a piddling increase. One percent is not going to do much of anything.”

— Ed Yardeni, president of investment advisory firm Yardeni Research, talking to Politico about Democrats’ proposed 1% tax on stock buybacks. The tax, projected to produce $124 billion over 10 years, targets companies that buy their own shares in order to boost prices, providing larger payouts for company executives. Some market analysts say the tax is so small that it won’t have much effect on companies considering buyouts. “Do you want to pay it? No,” said Howard Silverblatt of S&P Dow Jones Indices. “But if you’re buying stock on a continuing basis, your share price is moving more than 1 percent and very often it will move more than one percent — up or down — in one day.”

Moderna and the NIH Are Fighting Over Patent Rights to the Covid Vaccine

The Moderna vaccine against Covid-19 has become the subject of a bitter patent fight, with the National Institutes of Health insisting that three government scientists worked with the company on the genetic sequence used in the vaccine to trigger an immune response and should be named in the company’s patent application. The company, which excluded the government scientists in a July patent application, disagrees. It says that only Moderna’s scientists came up with the mRNA sequence used in the vaccine.

“The dispute is about much more than scientific accolades or ego,” Sheryl Gay Stolberg and Rebecca Robbins reported this week at The New York Times. They explained:

“If the three agency scientists are named on the patent along with the Moderna employees, the federal government could have more of a say in which companies manufacture the vaccine, which in turn could influence which countries get access. It would also secure a nearly unfettered right to license the technology, which could bring millions into the federal treasury.
“The fight comes amid mounting frustration in the U.S. government and elsewhere with Moderna’s limited efforts to get its vaccine to poorer countries. The company, which has not previously brought a product to market, received nearly $10 billion in taxpayer funding to develop the vaccine, test it and provide doses to the federal government. It has already lined up supply deals worth about $35 billion through the end of 2022.”

Dr. Francis Collins, the NIH director, told Reuters on Wednesday that scientists at the agency’s Vaccine Research Center played "a major role" in developing the vaccine and said that the government would defend its claim to a share of the patent. "I think Moderna has made a serious mistake here in not providing the kind of co-inventorship credit to people who played a major role in the development of the vaccine that they're now making a fair amount of money off of," Collins said.

He added that the federal collaboration with Moderna had been friendly for years, but that efforts to resolve the patent issue amicably had failed. "But we are not done,” he said. “Clearly this is something that legal authorities are going to have to figure out.”

Moderna reportedly expects sales of its Covid-19 vaccine to total $15 billion to $18 billion this year and up to $22 billion next year. “Sales of its vaccine both this year and next are likely to rank among the highest in a single year for any medical product in history,” the Times said.

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