Americans Making Less Than $200K Would See Bills Drop Under Democrat Tax Plan: Report

The Democratic Party's proposed changes to the tax code would save Americans making less than $200,000 per year thousands of dollars in annual taxes through 2025, according to estimates put out in a report by the bipartisan Joint Committee on Taxation.

While those earners would save under the revised code, those making more than $200,000 would pay thousands more in taxes. Ultimately, the revenue generated through this new program would raise more than $2 trillion over the next decade, the report estimates.

This new proposal comes as House Democrats seek ways to finance the Biden administration's $3.5 trillion proposed social investment plan, a move that would see billions of dollars invested toward universal pre-K, two years of free community college, prescription drug financing, and expanded Medicare.

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The $3.5 trillion budget would be one of the largest government investments since the New Deal era. Above, President Joe Biden sits underneath a portrait of former President Franklin D. Roosevelt in the Oval Office at the White House on September 1, 2021. Photo by Doug Mills-Pool/Getty Images

"Our tax system has lost its progressive power at the top end because the wealthiest taxpayers get to play by different rules from ordinary wage earners," Representative Richard Neal, who chairs the Ways and Means Committee which drafted the bill, said in a statement. "We are committed to enacting a law that will include meaningful (state and local tax) relief that is so essential to our middle-class communities, and we are working daily toward that goal."

Under the proposed changes, those making over $200,000 would experience a tax hike of 0.3 percent in 2023, while those earning over $500,000 would see a 1.6 percent increase. Earners making more than $1 million would see by far the largest jump, with an increase of 10.6 percent.

These hikes would carry into 2025 with the numbers staying around similar levels. However, by 2027, everyone making over $30,000 would see their taxes rise by differing values. Those making between $30,000 and $50,000 would see their taxes jump by less than one percent. Those earning between $50,000 and $200,00 would experience a jump of less than two percent. Those making more than $200,000 would see jumps of 2 percent with those earning more than a million experiencing a 10.5 percent hike.

Republicans oppose the new bill, saying it will result in high inflation and an overall economic slowdown. They fear it will lead to increased taxes for both the middle class and the wealthy. Through the budget "reconciliation" process, Senate Democrats can get past a Republican filibuster and pass the bill with 51 votes. However, with stated opposition from moderate Senators Joe Manchin and Kyrsten Sinema, the plan's fate remains unknown.

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Above, House Ways and Means Committee Chairman Richard Neal listens during a hearing with U.S. Trade Representative Katherine Tai on May 13, 2021, in Washington, D.C. His committee has been instrumental seeking ways to finance Biden's plan. Photo by Anna Moneymaker/Getty Images