Joe Biden Tax Plan Will See Highest Marginal Rates in These 5 States

Joe Biden's proposed tax plan would see California have the highest combined top marginal state and local tax (SALT) rates in the U.S., according to a leading free market think tank.

Analysis by the Tax Foundation said the next highest rates would be found in Hawaii, followed by New Jersey, Oregon and Minnesota.

According to the Democratic candidates' official campaign website, Biden plans a dozen middle class tax cuts and will "require corporations and the wealthiest Americans to finally pay their fair share" through policies such as raising the corporate tax rate to 28 percent and top individual income rate to 39.6 percent.

The analysis looked at how such policies would affect marginal tax rates. These apply to only part of an individual's taxable income, with different rates applied for each portion.

The Tax Foundation said such fiscal policies would would result in the combined top marginal SALT rate surpass 60 percent in California (62.64 percent), Hawaii (60.34) and New Jersey (60.09), as well as in New York City (62.03), while the rate would be just below 60 percent in Washington, D.C. (58.29).

Marginal and Average Tax Rates—here's how they differ

A taxpayer's average tax rate (or effective tax rate) is the share of income that he or she pays in taxes. By contrast, a taxpayer's marginal tax rate is the tax rate imposed on his or her last dollar of income. Taxpayers' average tax rates are lower—usually much lower —than their marginal rates.
Source: The Center on Budget and Policy Priorities (CBPP)

The Washington, D.C.-based foundation said the combined marginal rates under Biden's published tax plan, which does not include the repeal of the SALT deduction cap, would be the highest they have been since the Tax Reform Act of 1986. That act lowered the top tax rate for individuals from 50 percent to 28 percent.

"In 1986, before the provisions of the Tax Reform Act of 1986 went into effect, seven states and the District of Columbia featured combined top marginal rates higher than California's under the Biden plan, led by New York at a combined 63.9 percent," the foundation said.

Under Biden's tax plan, "the all-in federal rates would be the highest since 1981," it added.

5 states with highest combined top marginal SALT rates under Biden's tax plan

(without SALT deduction cap applied)

Source: Tax Foundation

  1. California: 62.64 percent
  2. Hawaii: 60.34 percent; 57.26 percent
  3. New Jersey: 60.09 percent
  4. Oregon: 59.24 percent
  5. Minnesota: 59.19 percent

Biden also plans to expand the country's current Child Tax Credit, which allows individuals to potentially reduce their federal income tax by up to $2,000 for each qualifying child.

His campaign website notes: "As President, he [Biden] will support a significant expansion of the Child Tax Credit (CTC) for the duration of the [COVID-19] crisis." More specifically, the site adds, Biden aims to increase the CTC to $3,000 per child for children aged from six to 17 and to $3,600 for children under the age of six.

The Democratic candidate has also proposed tax credits for families facing several other costs including health insurance, child care, caring for an aging loved one and buying a home for the first time.

The 2020 presidential election takes place in a week's time on November 3.

Biden was reported to be leading President Donald Trump in Wisconsin, Pennsylvania, Michigan, North Carolina, Florida and Arizona—six key states—according to the latest Reuters/Ipsos online polls of likely voters, which were published Monday.

The polls were each conducted among around 1,000 adults and each had a credibility interval of four percentage points. The polls in Wisconsin and Pennsylvania were conducted from October 20 to 26, while the polls in Florida, Michigan and North Carolina were done from October 14 to 20. The poll in Arizona took place from October 14 to 21.

Joe Biden Pennsylvania campaign rally October 2020
Democratic presidential candidate Joe Biden waves as he arrives at a drive-in campaign rally at Dallas High School in Dallas, Pennsylvania, on October 24. Marginal state and local tax rates under Biden's proposed tax plan would be the highest they’ve been since the Tax Reform Act of 1986. Drew Angerer/Getty Images