Reviewing Democratic candidates' tax plans

I reviewed Biden’s, Warren’s, and Sanders’ individual income, payroll, and business tax plans to try to corroborate and add to SZ’s methodology described in their one-pager. I put an asterisk next to each provision I think we can model in Tax-Calculator/CCC without any changes to the code bases. Especially with the corporate tax, the candidates have talked in generalities and have not proposed many specific reforms – in a few cases, SZ took the liberty of estimating what they think the corporate tax rate will be under different administrations.

Biden

  • Individual Income/ Payroll
    • Increase top rate on ordinary income to 39.6% [source]*
    • Increase rate on long-term capital gains and qualified dividends to 39.6% for AGI over $1 million [source]*
    • Eliminate Social Security payroll tax cap [source]*
    • Limit itemized deductions to 28% of AGI [source]*
  • Corporate
    • No specifics released (his website says “[reverse] the excesses of the Trump tax cuts for corporations”).
    • NOTE: SZ guess a 28% federal rate because it is a midpoint between Trump’s 21% and Obama’s 35%

Warren

  • Individual Income/ Payroll
    • Impose 14.8% Social Security payroll tax for individuals earning over $250k [source]
    • Additional 14.8% NIIT (unclear whether this is on top of existing 3.8%) for individuals with over $250k in earnings and families with over $400k in earnings [source]
      • Partnership and S-corp income added to NIIT base [source]*
    • NOTE: SZ mention “Dividends / capital gains taxed at ordinary rates (for surtax)” but I could not corroborate this.
  • Corporate
    • “Real Corporate Profits Tax”: 7 percent of a corporation’s profits as reported on its financial statement with an exemption for the first $100 million in profits. [source]
    • NOTE: SZ guess “Effective fed+state corporate tax rate up to 25% (Obama level)”

Sanders

  • Individual Income/ Payroll
    • Modified income brackets and increased rates
      • Adds 4% to each marginal tax rate for families above $29,000 in earnings [source]
      • Adds more brackets and higher rates at the top of the income distribution [source]
    • Lifts Social Security payroll tax cap on individuals earning over $250k [source]*
    • Tax long-term capital gains and qualified dividends at the same rate as ordinary income for AGI over $250k [source]*
    • Limit itemized deductions to 28% of AGI for households earning more than $250k [source]
  • Corporate
    • Impose corporate tax rate increases on companies with CEO to median worker ratios above 50 to 1 [source]
    • NOTE: SZ guess “Effective fed+state corporate tax rate up to 25% (Obama level)” and “better taxation of multinationals”
2 Likes

Thanks Peter, this is super helpful.

I’ll look through the asterisks (what we think is already parameterized) and then write back here if I see anything to add.