How Will the Joe Biden Tax Plan Affect Me?
The answer: most people will see no tax increases.
The tax plan that Joe Biden has rolled out is targeted at individuals making more than $400,000 a year, less than 1% of the population of the US. If you (like me) are not one of these lucky individuals, then it's very-likely that nothing in this article is going to apply to you.
But, for argument's sake, let's hop in the Model S, drive over to the penthouse, and analyze what Biden's tax code plans mean for you.
If you make over $400,000 a year
First, Biden is going to impose a 12.4% tax on incomes over $400,000 to fund Social Security, split evenly between employers and employees. This is a new tax, because Social Security taxes in the past have been capped on income at or below $137,700.
People who made over $137,700 had a tax break where they didn't have to pay into Social Security for all of their income. Biden's tax plan still allows people making over $137,700 to not pay the Social Security payroll tax for income above that amount as long as they make under $400,000.
When your income exceeds $400,000, you then have to start paying the tax again. This creates an interesting tax structure where people's income at the very bottom and the very top of their income is being taxed for Social Security, but income in the middle is not.
Second, while Biden is likely to keep many of changes from the Tax Cuts and Jobs Act, he has stated that he is going to revert the marginal tax rate for individual incomes above $400,000 from 37% back to the previous 39.6%. As with the Social Security tax, this does not kick in unless your income goes above $400,000.
Individuals making above $400,000 will also have their incomes above $400,000 see itemized deductions capped at 28%. That means if your income is over $400,000 and your tax rate is over 28%, you have less options for itemizing your deductions to get a lower tax rate.
Some business owners have benefitted from deducting up to 20% of their business income as well as 20% of the dividends from qualifying Real Estate Investment Trusts (REITs) on their taxes. Biden is proposing phasing that out for incomes above – drumroll - $400,000.
But what if you're not just making $400,000 a year? What if you are making even more than $400,000 a year? What if you earn over $1 million a year? That's when Biden's really going to hit you where it hurts – your investments.
Most people pay taxes on what's called "earned income," referring to things like your salary at your job. The tax rates for that range from 10% to 37%, depending on how much you make. If you make money from investments instead, that's a whole different story.
If you buy an investment and sell it for a profit within one year of purchase, you would pay your normal income tax on any profit you make. But if you hold the investment for longer than a year, you pay a reduced tax rate between 0% and 20%, depending on your income.
If you make over $200,000 ($250,000 for married couples), you would also pay a 3.8% tax on net investment income. What Biden is proposing is taxing any income over $1 million the same regardless of it comes from your salary or your long-term investments.
The wealthiest people in the US have seen a large amount of their income come from investments, and this measure would keep the wealthiest Americans from paying less in taxes than average working people just because the money comes from holding stocks or real estate instead of a traditional job.
If you make under $400,000 a year
Let's say that you, like more than 99% of Americans, do not make $400,000 a year. Does this mean Biden's tax plan will not affect you at all? There's actually a decent chance you might see some changes to your taxes.
Biden is proposing bringing back the First-Time Homebuyers' Tax Credit, originally created to help the housing market during the Great Recession, and provide up to $15,000 for first-time homebuyers. With interest rates at historic lows, this may be another incentive for you to consider dipping your toes into the real estate game and becoming a homeowner.
Biden is also proposing expanding the Child and Dependent Care Tax Credit from $3,000 up to $8,000 for one dependent and $16,000 if you have multiple dependents. The maximum reimbursement rate would also adjust from 35% to 50%. If you have kids or other dependents, this may reduce how much you pay in taxes by giving you a child tax credit the money you spend to support your family.
Biden also has a few very targeted tax cuts and tax benefits that will apply to a much smaller group of people. One is expanding the Earned Income Tax Credit (a tax credit for low-income people who are very close to the poverty line) and allowing people over the age of 65 to also claim the credit even if they do not have dependent children.
He would also provide a refundable low-income renter's credit, reinstate tax credits for the purchase of electric vehicles and improvements to your home to make them more energy-efficient, as well as exempt forgiven student loans from taxable income. These may not apply to as wide a group of people, but if you're older, a renter, looking to live a more green lifestyle, or seeking forgiveness for student loans, Biden's tax proposals can have you looking at a smaller tax bill.
Biden's plans for inheritances
At first glance, it looks like everyone making more than $400,000 a year will pay higher taxes and everyone else will pay less taxes than they currently do. However, there is a part of Biden's tax plan that may have an impact on you even if you are lower income – if you have a rich family.
The Tax Cuts and Jobs Act raised the threshold at which estate taxes are paid and lowered how much they have to pay in taxes. If you stand to inherit an estate worth $11.6 million dollars today ($23 million if you are a married couple), right now you don't pay taxes on it.
If you inherit more than that, you would pay a top rate of 40% tax. Biden is proposing lowering the threshold where the tax would kick in back down to $3.5 million ($7 million for married couples) and raising the tax rate back to 45%. This will affect roughly 0.3% of estates. If you are in the 99.7%, you do not need to worry about the Biden inheritance policy.
Now, the next part is closing an inheritance loophole called the "stepped-up basis" loophole. Right now, when an heir inherits an asset, they only pay taxes on the gain in value of the asset from the time that they inherited it.
Let's say your parents bought $100 worth of stocks decades ago and today those stocks are worth $10,000. If your parents passed away and left you the stocks, you would be allowed to sell them immediately and not pay any taxes.
If you held the stock and the price rose to $12,000, you would only pay taxes on the $2,000 in value the stocks gained since you inherited it. This because the initial value of the stocks would be "stepped-up" to the value at the time you inherited it rather than the value at the time your parents bought it.
This loophole has allowed the very wealthy to leave very valuable assets to their children without needing to pay taxes and allowed generations to pass large fortunes to their children. Biden has proposed closing this loophole and not stepping-up the value of an asset when it is inherited; taxes will instead be paid on the value of the asset from when it was first purchased.
This part of the plan has yet to be fully fleshed-out by Biden, but it appears to be modelled after a proposal from the Obama administration. That plan allowed an exclusion of $100,000 per person (rising with inflation) and excluding $250,000 for primary residences ($500,000 for couples). It also allowed a 15-year payment period and tax deferrals for family-owned small businesses. Biden may roll out similar provisions once he rolls his tax plan out before congress.
Does any of the Biden tax policy outlines even matter?
Maybe?
Biden has presented something of a wish list for his tax plan, but that doesn't mean he can wave a magic wand on January 20th and put it into place. This plan will require significant negotiations in Congress, and if Republicans retain a Senate majority, they may refuse to even allow a bill to have a hearing. Ultimately, Biden's tax proposals may change significantly as they work their way through Congress and if they are not able to garner enough support, they may never come into effect.
Why I Vote (as a Naturalized Citizen)
A recent estimate from Pew Research Center finds that naturalized citizens will comprise about 10% of the eligible voters in the 2020 election–that's about 23 million people, a 93% increase since 2000. That's right: We're here, and we're growing.
ElectProject
The power of naturalized citizen voters shouldn't be underestimated. Generally speaking, voting turnout rates of naturalized citizens are higher than natural citizens. According to Pew, 34% of naturalized citizen voters are Latinx and 31% identify as Asian; in each of those communities, more foreign-born immigrants show up to vote than non-immigrants. Where are these voters located? 56% of U.S. immigrants reside in the country's four most populated states. Of course, these are also the states with the most members of the electoral college: California (55), New York (29), Texas (38), and Florida (29).
It's no wonder why naturalized voter turnout would be high. Even as a naturalized citizen since I was one and a half years old, I can't take my right to vote for granted. Not even my jaded attitude as an academic or an irony-poisoned millennial can make me forget that 55 years ago, people like me were barely allowed into this country, thanks to immigration quotas and plain discrimination. The Immigration and Nationality Act of 1965 eliminated the quota system, and while the new immigration policy still favored northern and western Europeans, the law allowed increased flow of immigrants from Asia, Africa, and Latin America.
Amidst today's immigration crisis under the Trump administration, a growing number of voters are immigrants or the children of immigrants and shouldn't be ignored or dismissed. Even if immigration trends stay the same (rather than increase, as they are more likely to), then today's 10% of voters who are naturalized citizens will become at least 20% by 2040, with immigrants predicted to be the driving force of population growth in the U.S. in coming years.
These numbers impact the turnout of young voters like me and young people's investment in the policies and overall political system, which has turned away people who looked like me and which may turn away those people in the future if policies aren't changed. I'm a naturalized citizen, so I vote.
Young People Owe it to Themselves to Go Vote on Tuesday
Not the big one that the whole county is obsessed with—that's still a year away. This is the little one in which your voice can actually make a difference.
All across the country, on Tuesday, November 5th, local elections and special elections give a voice to the tiny fraction of voters who will actually show up. Historically speaking, these are likely to be aging voters who no longer work or have the luxury to set their own schedules. Historically speaking, young people have allowed the local government to be ruled by this privileged and aberrant minority of voters, even as their interests and agendas have drifted further from the cultural center. Historically speaking, we've thrown our power away—and not just our power, we've been throwing away paid time off work!
Getty
This is not like us. Aren't we the generation of entitled slackers who use any excuse to skip work? Is that just a myth created by baby boomers to make us sound way cooler—and therefore more threatening—than we are? In almost every state in the US, your boss is legally required to give you time off on election day to go vote! And in most states, that time off is paid!
In New York, any employee scheduled to work on Election Day is allowed three hours paid time off. In California, it's two hours. So why would you give away your labor? Find out where your polling place is, and figure out how long it takes to get there. If it's less than the time you're getting paid for, have you considered walking? If there's one thing better than a lovely Autumn stroll in the afternoon sun, it's getting your boss to pay for it.
What getting paid could look like on TuesdayShutterstock
Along with the countless municipal elections that will otherwise be decided by retirees, there are a number of state-level races worth watching, from the Virginia state legislature elections, which could flip both houses, to the effort to reinstate affirmative action measures in Washington state. In New York, several ballot measures have been getting attention, in particular the issue of ranked-choice voting, which will go into effect in 2021 if the voters choose it tomorrow.
Would you rather that decision be made by people who might not live to see it take effect? Or would you rather you and all your friends get a half-day to go vote? Remember how much you love half-days? So, take one! Spend ten minutes on ballotpedia, then take three hours off work.
Even if you think electoralism is a joke, and you devote your life to activism that will tear down the state and rebuild it from scratch, elections can build enthusiasm and political engagement. If anything, show up and write in "voting is for chumps." Maybe a surprising turnout of young people will get some more people to start the long process of waking up to to political realities. Maybe some candidates will notice the demographics and start shifting their politics to appeal to people like you. It could happen!
Office Space
Or maybe you'll just get a paid afternoon off, and watch your boss try—and fail—to argue with the law. Win-win.
A Stain on History, Happening in Real Time: Collective Amnesia and the European Refugee Crisis
The photo of Alan Kurdi, the drowned three-year-old who provided a name and face to the crisis, sparked international acknowledgment and inspired humanitarian activists all over the world.
Alan Kurdi, via Medium
But that was four years ago. What has happened to those 5.2 million since then?
Firstly, there are a lot more than 5.2 million now. According to the UN, as many as 63.5 million people have had to flee their homes because of conflict since World War II; and today, roughly eight thousand people per month arrive in Greece, Italy, and Spain from Syria, Guinea, Algeria, and neighboring countries. These numbers are staggering; the lives they describe are almost impossible to imagine. But each figure corresponds to individual experience and a body that likely has crossed countless miles of ocean to arrive on European shores. Though it is impossible to generalize their stories, the majority of these people are currently stranded in liminal places like refugee camps or living as undocumented citizens without access to rights, living wages, and other protections.
According to the Aegean Boat Report, around 20 boats have arrived on the Greek island of Lesvos alone in February 2019, carrying a total of 791 people. Lesvos's Moria Camp holds somewhere between eight to ten thousand refugees; it was initially designed to hold ten. Many have been there for over half a decade, and the conditions in the camp are becoming more and more unlivable by the day.
Many refugees go through hell and back to get there. Left with no choice but to flee violence and unlivable conditions, many spend thousands of dollars on hiring a smuggler who could carry them across the sea. The journey is treacherous—smugglers sometimes have deals with authorities or even pirates, and recent reports have revealed that the journey is more dangerous than ever before, with 1,600 to as many as 2,730 people dying at sea in 2018. The
UNHCR released a report which argued that although the official number of migrants crossing the Mediterranean fell last year, this was likely due to "reductions to search and rescue capacity coupled with an uncoordinated and unpredictable response to disembarkation." This in turn, "led to an increased death rate as people continued to flee their countries due to conflict, human rights violations, persecution, and poverty." As the world forgets, the little structure and safety netting that does exist inevitably falls apart.
The news is a strange beast. Some stories can dominate for months and fade out so suddenly it's almost like they never happened; particularly shocking acts of individual or random violence can consume headlines while systematic, long-term horrors can fade away, having lost their ability to capture audiences' attention. With countries like South Sudan, Yemen, and Afghanistan steadily experiencing mass exoduses for years and years at a time, and with the inundation of tragic stories and gory photographs from Syria, it's easy for ongoing horrors to slip underneath an ocean of facts and figures that seem too overwhelming to address.
It's also easy for governments to shirk off responsibility for taking in refugees, seeing as technically they are stateless and, therefore, are not protected by any citizenship rights. Though the Universal Declaration of Human Rights guarantees basic protections for all people on earth, it does not specify which countries are responsible for providing these protections.
But every political decision manifests in lived experiences. For example, when migrants arrive on the shores of Lesvos, they are sometimes met with volunteers who provide water and transportation to the camps. Families and individuals are assigned at random to tents, which are crammed next to each other, creating unlivable conditions.
Lesvos, in particular, has an extensive volunteer population, but overall aid groups often work as band-aids, failing to heal the sources of a larger issue and failing to structure a pathway forward. Instead, aid groups and refugees languish on Lesvos, in the grey area of statelessness and global amnesia. NGOs are gradually shifting their focus to working with refugees and locals to develop long-lasting relationships and skills, which can propel migrants forward into new lives.
But in light of the antipathy many locals hold towards newcomers, and also because of the trauma, language barriers, or other struggles that migrants face, the process of adjustment is challenging and will require individualized attention, patience, and cohesive efforts. Reports reveal that the majority of refugees fleeing severe conflicts will have vestiges of trauma; the IRC reported high levels of depression and PTSD among refugees across the board.
A 2011 Oxford University study found that the best way for refugees to move forward is through integration into life in their new countries. Solutions lie in treating the wound at its source, addressing xenophobia, and fighting for fair opportunities to education, jobs, healthcare, and other vital structural support systems. On the other hand, stranding migrants in places like Lesvos—where they live in unsanitary and dangerous conditions, surrounded by strangers who may also be experiencing trauma, with no idea of if or when they will be able to leave—is a product of a collective worldwide amnesia, a refusal to see what is happening in real time.
Long-term, slow-moving challengers are not foddered for breaking news. Particularly massive floods of refugees might pique the interest of a world leader; an artist might draw attention to the crisis through an installation in a busy city; but always, the cycles of violence and erasure continue as the world gets caught up in shinier, brighter topics. But remembering and acknowledging what is happening is the first step to moving in a new direction.
Eden Arielle Gordon is a writer and musician from New York City.
White House Correspondents' Association Snubs Comedians
Oliver Knox, the association's president, announced Chernow's selection on Monday, stating, "As we celebrate the importance of a free and independent news media to the health of the republic, I look forward to hearing Ron place this unusual moment in the context of American history."
Town & Country Magazine
Ironically, it's Trump's expected absence from the event that worries the association. Another facet of the annual tradition is for the seated president to speak first, jest with the press corps and perhaps poke fun at himself, and then the comedian parries back in their own speech. However, Trump has declined to attend the last two years, giving no indication that he plans to appear at the April 27th event with Chernow. Knox has noted that the president's absence can skew the tone of the room into feeling antagonistic toward the current administration, rather than a good-humored acknowledgement of differences.
In fact, last year's event (sans Trump) featured Michelle Wolf, who incurred the president's wrath and general backlash for her remarks. For instance, Wolf singled out White House reporters for empowering Trump, stating, "You helped create this monster, and now you're profiting off of him." Later Trump took to Twitter to denounce Wolf as a "filthy 'comedian'."
CNN - The Blaze
This year, Chernow is clarifying that "he's never been mistaken for a stand-up comedian," but he's aware of the "unusual moment" Knox speaks of, in terms of the fraught relationship between the Trump administration and the press. High points of tension include the widely publicized legal battle between CNN and the White House after CNN correspondent Jim Acosta's press pass was revoked and then reinstated by a judge after his network took the matter to court.
Stuck in the middle, Chernow released a statement, "The White House Correspondents' Association has asked me to make the case for the First Amendment and I am happy to oblige. Freedom of the press is always a timely subject and this seems like the perfect moment to go back to basics. My major worry these days is that we Americans will forget who we are as a people and historians should serve as our chief custodians in preserving that rich storehouse of memory."
Meg Hanson is a Brooklyn-based writer, teacher, and jaywalker. Find Meg at her website and on Twitter @megsoyung