An Analysis of Joe Biden's Tax Proposals, October 2020 Update
Abstract
- Using the Tax-Calculator (3.0.0) microsimulation model, we estimate that Joe Biden’s proposals would raise federal revenue by 2.8 trillion dollars over the next decade (2021–30).
- The majority of new federal revenue would come from businesses and corporations (1.9 trillion dollars). The remaining revenue would come from individual income and payroll tax increases (616.8 billion dollars) and an increase in estate and gift taxes (276.4 billion dollars).
- In 2021, Biden’s proposals would increase taxes, on average, for the top 5 percent of households and reduce taxes on households in the bottom 95 percent. In 2030, Biden’s proposals would increase taxes, on average, for households at every income level, but tax increases would primarily fall on the top 1 percent of income earners.
- Using the open-source OG-USA (0.6.2) model, we estimate that Biden’s proposals would reduce gross domestic product (GDP) by 0.16 percent over the next decade, slightly increase GDP the second decade (0.19 percent), and result in a small reduction in GDP in the long run (0.18 percent).
Type
Publication
AEI Report – American Enterprise Institute
About the Authors
Kyle Pomerleau is a resident fellow at the American Enterprise Institute, where he studies federal tax policy. He writes on various tax policy topics, including corporate taxation, international tax policy, carbon taxation, and tax reform.
Grant M. Seiter is a research assistant at the American Enterprise Institute.