Joe Biden’s tax and spending reconciliation bill could bring the developed world’s highest tax rates to America.
Advocacy group Americans for Tax Reform predicts taxes could exceed 50% in all 50 states. When federal and state income taxes are added, the combined rate could soar to 66.2% in New York State and 64.7% in California.
The Tax Foundation estimates an increase of these proportions would affect the United States’s competitiveness on a global scale.
“Raising the top marginal tax rate on ordinary income to the highest in the Organization for Economic Co-operation and Development (OECD) will damage U.S. competitiveness,” the think tank said in a recent report. “It will also reduce incentives to work, save, invest, and innovate, with broad implications for the U.S. economy.”
The OECD comprises of 38 states, whose objective is to coordinate their economic and social policies.
Under current laws, the top marginal tax rate on ordinary income will increase from 37% to 39.6% by the year 2026. The top marginal tax rate on personal income at the federal level will increase to 51.4%.
High-income taxpayers will face a modified adjusted gross income surtax of 8%, while all income over $400,000 will be subject to a 3.8% tax from a mix of Medicare and net investment income taxes.
The foundation previously revealed about 159,000 jobs are predicted to be lost, and both wages and economic output will be negatively affected.
After the House recently passed the controversial $1.2 trillion infrastructure bill, Democrats negotiated future votes on the ambitious $1.75 trillion separate budget bill known as Build Back Better.
Republicans warn the legislation includes radical-left measures like new “labor protections” that undermine sustainable economic development.
The Biden administration’s proposed federal tax hike is the largest since 1993.