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• Biden has proposed more than a dozen tax cuts, many of them narrowly focused, but some of them much broader, notably a one-year expansion of the child tax credit.
• Independent tax policy analysts are in the process of gauging exactly how much these cuts will benefit middle-class families, but preliminary assessments suggest there will be some reduction in taxes.
• What’s not known for now is whether these cuts will outweigh the increased burden on taxpayers from Biden’s separate hike in the corporate tax rate.
In a new campaign ad, Democratic presidential nominee Joe Biden offers an optimistic, can-do pitch to American voters struggling with the coronavirus and economic insecurity.
In the minute-long ad, released Oct. 4, Biden touts a scientific approach to fighting the coronavirus before turning to aid for the economy:
"Joe listened to both small business owners and workers to create his economic plan that cuts taxes for middle class families, creates 18 million new jobs in his first term, and raises wages by as much as $15,000 a year. Joe Biden's plans will help working families immediately by making the super-rich finally pay their fair share. For Joe, it's never been about ego, it's always been about the work he can do for working families."
We wanted to know if the Biden plan "cuts taxes for middle class families." This stuck out because it’s an attempt to attack, head on, the claims from the Trump team that Biden will raise taxes. .
For instance, during the Republican National Convention, former Trump cabinet member Nikki Haley said Biden wants "massive tax hikes on working families," while Trump’s son Donald Trump Jr. later said, "Joe Biden wants to raise taxes on 82% of all Americans."
In both cases, we rated the statements False. Independent tax analysts agreed that the Biden plan would not directly raise taxes on any household earning below $400,000 a year, and it would inflict small hits from the indirect (and hard-to-quantify) impact of raising the corporate tax rate, which could have an indirect tax effect for most taxpayers. The analyses found that the vast majority of the income losses from the Biden tax proposal would fall on the top one-fifth of incomes, and especially on the top 1%.
Despite the assertion in Biden’s new ad, the idea of middle-income tax cuts seems to conflict with those same analyses we cited in our previous fact checks, since they actually predicted a modest increase in taxes for middle-income Americans, rather than a decrease.
However, there’s a reason for that: Several of those groups told PolitiFact that those analyses are being revised to take into account up to 18 specific tax cuts Biden has proposed since their analyses came out earlier this year.
At this point it would be premature to say that the Biden tax cuts, if they are eventually enacted, would actually end up reducing tax bills for the broad middle of tax-paying Americans, and by how much. The plan, for instance, leaves untouched the basic structure of income tax rates that affect every taxpayer.
Independent analysts from across the ideological spectrum say they plan to have full analyses out within a week or two.
For now, here are some of the bigger cuts being proposed by the campaign:
• A temporarily expanded child tax credit, worth $3,000 per child for children ages 6 to 17 and $3,600 for children under 6. Biden would make the credit fully refundable.
• A $15,000 permanent tax credit for first-time homebuyers that could be advanced to the claimant rather than waiting until the following tax year.
• A refundable tax credit for health insurance premiums.
• Up to $8,000 in tax credits to help pay for child care.
The Biden campaign is also proposing a range of additional tax credits that are narrower, including credits for solar energy, wind energy, energy efficiency, and electric vehicles; credits for small businesses on retirement plans and accessibility improvements; a renter’s tax credit; and a credit for informal caregivers.
Importantly, we don’t know, for now at least, how much of the increase from the corporate tax hike will be wiped out by these tax cuts, and whether they will erase the corporate tax cuts entirely.
One tax analysis group, the Penn-Wharton Budget Model, found that lower income groups would benefit most from the temporary child tax credit Biden is proposing. The bottom one-fifth of the income spectrum would see their after-tax incomes rise by 9% due to the tax change, the analysis concluded. The next one-fifth would see a 3% benefit, and the middle and second-highest one-fifths would get a 1% boost. The dollar benefits for each of these groups would range between $2,700 and $3,800. (The Penn-Wharton group hasn’t analyzed the other Biden tax cut proposals.)
Representatives of two other closely watched tax-analysis groups, the Urban Institute-Brookings Institution Tax Policy Center and the American Enterprise Institute, told PolitiFact that they expect to publish revised studies of Biden’s tax plan soon.
"We’re not sure if they’ll fully offset the increase in corporate taxes" that the average taxpayer may see, but it should change the result, said Eric Toder, a fellow at the Urban Institute-Brookings Institution Tax Policy Center. He added, "It certainly would not be a surprise if the newly analyzed cuts more than even out" any added burden from the corporate tax hike.
A preliminary assessment by the American Enterprise Institute is in the same ballpark.
"The most up-to-date version of the Biden plan has a number of tax cuts that would reduce income tax liability for many middle-income taxpayers," said Kyle Pomerleau, a resident fellow at the American Enterprise Institute.
Pomerleau added that because Biden so far is only proposing the child credit for one year, "the plan would not provide much of a bump for the middle class" beyond that year.
During that year, however, Pomerleau said it’s "fair" for Biden to refer to his plan as cutting taxes for middle-class families. "The child credit expansion would benefit a lot of taxpayers, many of whom are middle class," he said.
Another wild card is that some of the tax cuts being proposed are narrowly targeted, meaning there could be significant variation in how much individual taxpayers will benefit.
Joe Biden, ad, Oct. 4, 2020
Biden-Harris campaign, "A Tale of Two Tax Policies: Trump Rewards Wealth, Biden Rewards Work," accessed Oct. 7, 2020
Penn-Wharton Budget Model, "Presidential Candidate Joe Biden's Proposed Child Tax Credit Expansion," Sept. 24, 2020
PolitiFact, "Nikki Haley's False RNC claim that Biden wants 'massive' tax hikes on working families," Aug. 25, 2020
PolitiFact, "Donald Trump Jr. misrepresents Joe Biden’s tax plan," Sept. 4, 2020
Email interview with Kyle Pomerleau, resident fellow at the American Enterprise Institute, Oct. 7, 2020
Interview with Eric Toder, fellow at the Urban Institute-Brookings Institution Tax Policy Center, Oct. 7, 2020