The Strategist

U.S. expects tax hikes for families with annual incomes over $1M


09/16/2021 - 06:16



American households with incomes of $1 million or more a year will pay 11% more in taxes in 2023 thanks to reforms proposed by Democrats. The Joint Committee on Taxation estimates they will pay an additional $96,000, and their average tax rate is projected to rise from 30.2 percent to 37.3 percent.



pxhere
pxhere
The Democrats' proposed tax reforms would raise the levy for households with incomes of $1 million or more by an average of about 11% in 2023. The increase is expected to reduce the tax burden on low- and middle-income families, CNBC reports. 

The Joint Committee on Taxation estimated that millionaire families will pay an additional $96,000 in 2023, and their average tax rate is projected to increase from 30.2% to 37.3%. The Democrats' tax policy would result in an average tax cut for all households with incomes under $200,000. For example, those with incomes between $20,000 and $30,000 would get an 87% reduction in federal taxes in 2023, which would amount to more than $18,700 in tax savings, estimates the committee.

The Joint Committee on Taxation does not analyze the tax consequences using the $400,000 income cap. However, for a group with income between $200,000 and $500,000 in 2023, the tax burden would increase - by 0.3 percent, or $2900. The increase is likely to fall entirely on those with incomes above $400,000.

House Democrats on Monday, Sept. 13, proposed a series of tax reforms aimed at corporations and wealthy households to help fund climate initiatives and a major expansion of the U.S. social safety net. Their proposals would raise the maximum marginal corporate tax rate to 39.6% and increase the maximum federal rate on long-term capital gains from 20% to 25%. They would also impose an additional 3% tax on households with at least $5 million in annual income.  

source: cnbc.com