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Louis Jacobson
By Louis Jacobson Diciembre 2, 2024
Back to No tax increase for anyone making less than $400,000

Biden keeps his pledge not to raise taxes on people earning under $400,000

As a presidential candidate, Joe Biden promised not to raise taxes on households earning less than $400,000. Biden has not raised any taxes that would directly hit Americans under that income level. But there's an asterisk: He enacted some changes in corporate taxation.

Corporate tax increases tend to focus most heavily on wealthy individuals. Still, it's possible for some lower-income earners to feel a corporate tax increase's effects. 

For instance, a higher corporate tax could depress the values of shares owned by middle- and lower-income taxpayers, or companies could decide against making investments that increase productivity, which over the long term could reduce workers' wages.

But tax experts say the effect is modest, and the impact can only be loosely modeled rather than observed and tracked directly. 

The Urban Institute-Brookings Institution Tax Policy Center modeled the tax changes from the Inflation Reduction Act of 2022, the major bill Biden signed that included corporate tax provisions. It found that the bottom 80% of earners, which covers households earning up to about $183,000, would see a reduction in taxes owed. 

Households earning between $183,000 and $281,000 saw an increase in taxes of $70, or less than 0.1% of income earned. Households earning between $281,000 and $409,000 saw an increase of $170, also less than 0.1% of income earned.

"President Biden did focus his tax hikes on corporations and higher earners," said Garrett Watson, a senior policy analyst for the Tax Foundation, a think tank. Although corporate tax burdens do hit Americans of more typical incomes, the mechanism is so indirect that it's probably "not in scope" for measuring whether Biden stuck to his promise.

The pass-along effect of corporate taxes is real, including for households earning less than $400,000. However, to the extent the impact can be measured, it tends to be small, and the vast majority of what Biden did on tax policy adhered to his campaign pledge. 

On balance, we rate this a Promise Kept.

Nuestras fuentes

Urban Institute-Brookings Institution Tax Policy Center, "T22-0028 - H.R.5376, The Inflation Reduction Act of 2022 as Passed by the Senate, Including Premium Tax Credit, by ECI Percentiles, 2023"

Email interview with Kyle Pomerleau, senior fellow at the American Enterprise Institute, Nov. 21, 2024

Email interview with Garrett Watson, senior policy analyst for the Tax Foundation, Nov. 21, 2024

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