Analysis of 2020 Presidential Tax Plans

Tax policy has become one of the major issues of the 2020 presidential election. Our experts are continuing to provide leading research and analysis on the latest tax proposals. Explore our resources below to see where the 2020 presidential candidates stand on taxes.

 


Analysis by Candidate

Top Rates in Each State Under Joe Biden’s Tax Plan

October 20, 2020

Democratic presidential nominee Joe Biden’s tax plan would yield combined top marginal state and local rates in excess of 60 percent in three states: California, Hawaii, and New Jersey (also New York City).

How Would Biden’s Tax Plan Change the Competitiveness of the U.S. Tax Code?

October 19, 2020

While the Biden campaign is certainly focused on increasing taxes on U.S. businesses and high-income earners, it is important that policymakers also understand what that reversal might do to U.S. competitiveness, and the competitive global environment in which U.S. companies and U.S. workers operate.

How Should Wealth and Work Be Treated in the Tax Code?

September 21, 2020

Taxing capital income and labor income similarly is a difficult goal to achieve and comes with real trade-offs that policymakers have to consider when proposing tax changes. There are opportunities to reduce avoidance incentives in the tax code by ensuring that effective tax rates between business forms and sources of financing are as neutral as they can be, in addition to shoring up rules related to self-employment taxes. Biden’s tax plan, however, would go the other direction by increasing the bias in favor of debt-financing and non-corporate investment.

Biden’s Plan to Address Offshoring Comes with Contradictions

September 9, 2020

If the goal of the Biden campaign is to bring new investment and jobs to the U.S., it is doubtful that these new tax rules will contribute to that goal.

Placing Joe Biden’s Tax Increases in Historical Context

October 22, 2020

If we consider Biden’s tax plan over the entire budget window (2021 to 2030) as a percentage of GDP—1.30 percent—it would rank as the 6th largest tax increase since the 1940s and and one of the largest tax increases not associated with wartime funding.

Biden’s Proposal Would Shift the Distribution of Retirement Tax Benefits

August 26, 2020

One of Biden’s tax proposals that has gotten little attention is a change that would shift the benefits of tax deferral in traditional retirement accounts toward lower- and middle-income earners. The plan would reduce the tax benefit for those earning above $80,250 but under $400,000, violating Biden’s tax pledge to not raise taxes on earners below the $400,000 threshold.

President Trump Outlines Second Term Tax Ideas

August 25, 2020

Broad themes of the president’s agenda include providing tax relief to individuals and tax credits to businesses that engage in desired activities, while the status of expiring TCJA provisions and tariffs seems uncertain.

Reviewing Joe Biden’s Tax Vision

August 20, 2020

Biden’s tax vision is twofold: higher taxes on high-income earners and businesses paired with more generous provisions for specific activities and households.

Where Does Kamala Harris Stand on Tax Policy?

August 12, 2020

What tax policy ideas did Harris propose along the campaign trail, and how do they differ from Biden’s plan?

Not All Taxes Are Created Equal

July 27, 2020

There are better and worse ways to raise a dollar of revenue. That’s because no two taxes impact the economy the same.

Taxes: The Price We Pay for Government

July 27, 2020

The U.S. is one of the most “business dependent” tax systems in the industrialized world. U.S. businesses pay about 29 percent of all taxes collected in the country and remit another 64 percent—adding up to 93 percent of all taxes collected in America.

10 Common Tax Myths, Debunked

July 15, 2020

Discover why tax refunds shouldn’t be celebrated, why you should pay your income tax bill, and why certain deductions are wrongly labeled “loopholes,” among other useful facts.

Common Tax Questions, Answered

July 15, 2020

Learn everything from the basics of who pays taxes and the difference between credits and deductions, to how taxes impact the economy and what constitutes sound tax policy.

Biden’s Plan to Boost Research and Development Should Include Cancellation of Upcoming R&D Amortization

July 13, 2020

As concern over American competitiveness and onshoring of innovative activity increases, presidential candidates and policymakers should keep in mind the tax increases scheduled to take effect in the coming years, including the amortization of R&D and phaseout of the broader expensing provisions.

Details and Analysis of Democratic Presidential Nominee Joe Biden’s Tax Plan

October 22, 2020

What are the details of Joe Biden's tax plan? How would it affect the economy, revenue, and taxpayers?

Analysis of Capital Gains Tax Proposals Among Democratic Presidential Candidates

March 18, 2020

Joe Biden and Bernie Sanders have both released proposals to tax capital gains at ordinary income rates for the wealthiest Americans. As part of a broader platform to address income inequality, Biden and Sanders suggest increasing current capital gains rates on taxpayers with income over $1 million and $250,000, respectively.

A History and Analysis of Payroll Tax Holidays

March 31, 2020

As Congress and the White House consider ways to shore up the economy in the face of a public health crisis, President Trump has suggested suspending the entire payroll tax for the duration of the year. That would cost about $950 billion, according to our analysis.

Analysis of Democratic Presidential Candidate Individual Income Tax Proposals

March 11, 2020

Joe Biden and Bernie Sanders have each proposed changes to the individual income tax, one of the largest sources of federal revenue. Our new analysis compares the economic, revenue, and distributional effects of the various proposals.

Summary of the Latest Federal Income Tax Data, 2020 Update

February 25, 2020

The latest IRS data shows that the U.S. individual income tax continues to be very progressive, borne primarily by the highest income earners. The top 1 percent of taxpayers pay a 26.8 percent average individual income tax rate, which is more than six times higher than taxpayers in the bottom 50 percent (4.0 percent).

Insights into the Tax Systems of Scandinavian Countries

February 24, 2020

Sen. Bernie Sanders often refers to tax systems in Scandinavian countries like Denmark and Sweden. But how do Scandinavian countries really pay for their government spending?

Analysis of Democratic Presidential Candidates Corporate Income Tax Proposals

February 19, 2020

2020 Democratic presidential candidates have proposed various changes to the corporate income tax, which includes increasing the rate, ranging from 25 percent to 35 percent, imposing a corporate surtax or a minimum tax, and lengthening depreciation schedules.

Analysis of Democratic Presidential Candidate Payroll Tax Proposals

February 11, 2020

Several 2020 Democratic presidential candidates have proposed changes to federal payroll tax rates and the Social Security payroll tax wage base to raise revenue and maintain solvency for major federal entitlement programs.

Analysis of Sen. Warren and Sen. Sanders’ Wealth Tax Plans

January 27, 2020

New modeling finds that the wealth taxes proposed by Sen. Warren and Sen. Sanders would raise significantly less revenue than promised, face serious administrative and compliance challenges, and would increase foreign ownership of U.S. capital.

Biden’s Minimum Book Income Tax Proposal Would Create Needless Complexity

December 13, 2019

Comparing Ordinary Income Tax Rate Proposals by 2020 Presidential Candidates

November 20, 2019

Wealth Taxes in Europe

November 20, 2019

Unpacking Biden’s Tax Plan for Capital Gains

July 31, 2019

Proposed Corporate Rate Hike Would Damage Economic Output

August 23, 2018

Raising the corporate tax rate would reduce economic growth and lead to a smaller capital stock, lower wage growth, and reduced employment.

Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions

May 31, 2019

The Trump administration has so far imposed $80 billion worth of new taxes on Americans by levying tariffs on thousands of products, which is equivalent to one of the largest tax increases in decades.

Top Rates in Each State Under Joe Biden’s Tax Plan

October 20, 2020

Democratic presidential nominee Joe Biden’s tax plan would yield combined top marginal state and local rates in excess of 60 percent in three states: California, Hawaii, and New Jersey (also New York City).

How Would Biden’s Tax Plan Change the Competitiveness of the U.S. Tax Code?

October 19, 2020

While the Biden campaign is certainly focused on increasing taxes on U.S. businesses and high-income earners, it is important that policymakers also understand what that reversal might do to U.S. competitiveness, and the competitive global environment in which U.S. companies and U.S. workers operate.

How Should Wealth and Work Be Treated in the Tax Code?

September 21, 2020

Taxing capital income and labor income similarly is a difficult goal to achieve and comes with real trade-offs that policymakers have to consider when proposing tax changes. There are opportunities to reduce avoidance incentives in the tax code by ensuring that effective tax rates between business forms and sources of financing are as neutral as they can be, in addition to shoring up rules related to self-employment taxes. Biden’s tax plan, however, would go the other direction by increasing the bias in favor of debt-financing and non-corporate investment.

Biden’s Plan to Address Offshoring Comes with Contradictions

September 9, 2020

If the goal of the Biden campaign is to bring new investment and jobs to the U.S., it is doubtful that these new tax rules will contribute to that goal.

Placing Joe Biden’s Tax Increases in Historical Context

October 22, 2020

If we consider Biden’s tax plan over the entire budget window (2021 to 2030) as a percentage of GDP—1.30 percent—it would rank as the 6th largest tax increase since the 1940s and and one of the largest tax increases not associated with wartime funding.

Biden’s Proposal Would Shift the Distribution of Retirement Tax Benefits

August 26, 2020

One of Biden’s tax proposals that has gotten little attention is a change that would shift the benefits of tax deferral in traditional retirement accounts toward lower- and middle-income earners. The plan would reduce the tax benefit for those earning above $80,250 but under $400,000, violating Biden’s tax pledge to not raise taxes on earners below the $400,000 threshold.

Reviewing Joe Biden’s Tax Vision

August 20, 2020

Biden’s tax vision is twofold: higher taxes on high-income earners and businesses paired with more generous provisions for specific activities and households.

Where Does Kamala Harris Stand on Tax Policy?

August 12, 2020

What tax policy ideas did Harris propose along the campaign trail, and how do they differ from Biden’s plan?

Biden’s Plan to Boost Research and Development Should Include Cancellation of Upcoming R&D Amortization

July 13, 2020

As concern over American competitiveness and onshoring of innovative activity increases, presidential candidates and policymakers should keep in mind the tax increases scheduled to take effect in the coming years, including the amortization of R&D and phaseout of the broader expensing provisions.

Details and Analysis of Democratic Presidential Nominee Joe Biden’s Tax Plan

October 22, 2020

What are the details of Joe Biden's tax plan? How would it affect the economy, revenue, and taxpayers?

Analysis of Capital Gains Tax Proposals Among Democratic Presidential Candidates

March 18, 2020

Joe Biden and Bernie Sanders have both released proposals to tax capital gains at ordinary income rates for the wealthiest Americans. As part of a broader platform to address income inequality, Biden and Sanders suggest increasing current capital gains rates on taxpayers with income over $1 million and $250,000, respectively.

Analysis of Democratic Presidential Candidate Individual Income Tax Proposals

March 11, 2020

Joe Biden and Bernie Sanders have each proposed changes to the individual income tax, one of the largest sources of federal revenue. Our new analysis compares the economic, revenue, and distributional effects of the various proposals.

Analysis of Democratic Presidential Candidates Corporate Income Tax Proposals

February 19, 2020

2020 Democratic presidential candidates have proposed various changes to the corporate income tax, which includes increasing the rate, ranging from 25 percent to 35 percent, imposing a corporate surtax or a minimum tax, and lengthening depreciation schedules.

Analysis of Democratic Presidential Candidate Payroll Tax Proposals

February 11, 2020

Several 2020 Democratic presidential candidates have proposed changes to federal payroll tax rates and the Social Security payroll tax wage base to raise revenue and maintain solvency for major federal entitlement programs.

Biden’s Minimum Book Income Tax Proposal Would Create Needless Complexity

December 13, 2019

Comparing Ordinary Income Tax Rate Proposals by 2020 Presidential Candidates

November 20, 2019

Unpacking Biden’s Tax Plan for Capital Gains

July 31, 2019

Proposed Corporate Rate Hike Would Damage Economic Output

August 23, 2018

Raising the corporate tax rate would reduce economic growth and lead to a smaller capital stock, lower wage growth, and reduced employment.

President Trump Outlines Second Term Tax Ideas

August 25, 2020

Broad themes of the president’s agenda include providing tax relief to individuals and tax credits to businesses that engage in desired activities, while the status of expiring TCJA provisions and tariffs seems uncertain.

A History and Analysis of Payroll Tax Holidays

March 31, 2020

As Congress and the White House consider ways to shore up the economy in the face of a public health crisis, President Trump has suggested suspending the entire payroll tax for the duration of the year. That would cost about $950 billion, according to our analysis.

Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions

May 31, 2019

The Trump administration has so far imposed $80 billion worth of new taxes on Americans by levying tariffs on thousands of products, which is equivalent to one of the largest tax increases in decades.

Not All Taxes Are Created Equal

July 27, 2020

There are better and worse ways to raise a dollar of revenue. That’s because no two taxes impact the economy the same.

Taxes: The Price We Pay for Government

July 27, 2020

The U.S. is one of the most “business dependent” tax systems in the industrialized world. U.S. businesses pay about 29 percent of all taxes collected in the country and remit another 64 percent—adding up to 93 percent of all taxes collected in America.

10 Common Tax Myths, Debunked

July 15, 2020

Discover why tax refunds shouldn’t be celebrated, why you should pay your income tax bill, and why certain deductions are wrongly labeled “loopholes,” among other useful facts.

Common Tax Questions, Answered

July 15, 2020

Learn everything from the basics of who pays taxes and the difference between credits and deductions, to how taxes impact the economy and what constitutes sound tax policy.

Summary of the Latest Federal Income Tax Data, 2020 Update

February 25, 2020

The latest IRS data shows that the U.S. individual income tax continues to be very progressive, borne primarily by the highest income earners. The top 1 percent of taxpayers pay a 26.8 percent average individual income tax rate, which is more than six times higher than taxpayers in the bottom 50 percent (4.0 percent).

Insights into the Tax Systems of Scandinavian Countries

February 24, 2020

Sen. Bernie Sanders often refers to tax systems in Scandinavian countries like Denmark and Sweden. But how do Scandinavian countries really pay for their government spending?

Analysis of Sen. Warren and Sen. Sanders’ Wealth Tax Plans

January 27, 2020

New modeling finds that the wealth taxes proposed by Sen. Warren and Sen. Sanders would raise significantly less revenue than promised, face serious administrative and compliance challenges, and would increase foreign ownership of U.S. capital.

Comparing Ordinary Income Tax Rate Proposals by 2020 Presidential Candidates

November 20, 2019

Wealth Taxes in Europe

November 20, 2019

Proposed Corporate Rate Hike Would Damage Economic Output

August 23, 2018

Raising the corporate tax rate would reduce economic growth and lead to a smaller capital stock, lower wage growth, and reduced employment.


Modeling of Democratic Campaign Plans

Wealth Tax Proposal Estimates

Wealth taxes on ultra-wealthy households have been proposed by Democratic presidential candidates to fight against inequality and raise extra revenue but there is substantial uncertainty about how much revenue can be raised.

Comparing wealth taxes to income taxes shows how seemingly low rates on wealth equate to high income tax rates. Wealth taxes in European countries have had disappointing results and many have been phased out. A wealth tax would face serious administrative and compliance challenges due to valuation difficulties and tax evasion and avoidance issues.

A wealth tax would also induce foreign inflows of hundreds of billions of dollars a year to replace reductions in U.S. savings, which would cause international investors to replace home-grown billionaires as owners of capital.

See Full Wealth Tax Estimate
Summary of Wealth Tax Proposal Estimates

Source: Tax Foundation General Equilibrium Model

  Sen. Sanders (I-VT) Sen. Warren (D-MA)
Conventional Revenue, 2020-2029 (Billions) $3,261 $2,636
Dynamic Revenue, 2020-2029 (Billions) $2,555 $2,193
Gross Domestic Product (GDP) -0.43% -0.37%
Gross National Product (GNP) -1.65% -1.15%
Capital Stock -0.81% -0.69%
Wealth -10.21% -7.19%

Corporate Tax Proposal Estimates

2020 Democratic presidential candidates have proposed various changes to the corporate income tax to raise revenue for their policy proposals.

This includes increasing the corporate income tax rate, ranging from 25 percent to 35 percent, imposing a corporate surtax or a minimum tax, and lengthening depreciation schedules.

The effect of each of these proposals will be to increase the cost of capital in the United States, making it more expensive for businesses to make productivity-enhancing investments, and by doing so, reduce economic output, wages, and employment. 

See Full Corporate Tax Estimate
Summary of Democratic Presidential Corporate Tax Proposal Estimates

*Sen. Klobuchar has proposed a variety of corporate tax rate increases, ranging from 25 percent to fund infrastructure improvements, 27 percent to fund deficit reduction, and 28 percent to fund child care and paid family leave, and has mentioned in debates that she would repeal the Tax Cuts and Jobs Act corporate tax rate.

Source: Tax Foundation General Equilibrium Model, November 2019.

  Fmr. Vice President Biden (D) Fmr. Mayor Bloomberg (D) Fmr. Mayor Buttigieg (D) Sen. Klobuchar (D-MN) Sen. Sanders (I-VT) Sen. Warren (D-MA)
Plan Details 28% corporate income tax rate and 15% minimum tax on book income 28% corporate income tax rate 35% corporate income tax rate 25% corporate income tax rate* 35% corporate income tax rate and economic depreciation for all investments 35% corporate income tax rate and 7% surtax on book income
Static Revenue, 2020-2029 (Billions) $1,553 $1,253 $2,507 $716 $3,871 $3,379
Dynamic Revenue, 2020-2029 (Billions) $1,351 $1,093 $2,149 $629 $2,689 $2,683
Gross Domestic Product (GDP) -1.20% -1.00% -2.10% -0.50% -3.80% -3.70%
Capital Stock -2.90% -2.30% -5.10% -1.30% -9.10% -8.70%
Wage Rate -1.00% -0.80% -1.80% -0.40% -3.20% -3.10%
Full-time Equivalent Jobs -236,000 -187,000 -413,000 -103,000 -755,000 -722,000

Payroll Tax Proposal Estimates

2020 Democratic presidential candidates have proposed various payroll tax changes to raise revenue and maintain solvency for major federal programs.

This includes levying Social Security payroll taxes on taxpayers with high wages, raising the Social Security payroll tax rate, and enacting new payroll taxes to fund new federal programs.

Each proposed change to payroll taxes levied on wages would make the tax code more progressive but would also reduce after-tax incomes for most wage earners. This is because employees fully bear the economic burden of payroll taxes, lowering the incentive to work and reducing economic output.

See Full Payroll Tax Estimate
Summary of Democratic Presidential Payroll Tax Proposal Estimates

Source: Tax Foundation General Equilibrium Model, November 2019.

  Fmr. Vice President Biden (D) Fmr. Mayor Buttigieg (D) Sen. Klobuchar (D-MN) Sen. Sanders (I-VT) Sen. Warren (D-MA)
Plan Details 12.4% Social Security payroll tax on wages above $400,000 12.4% Social Security payroll tax on wages above $250,000 12.4% Social Security payroll tax on wages above $250,000 7.5% payroll tax on employers with a $2 million payroll exemption and 12.4% Social Security payroll tax on wages above $250,000 14.8%Social Security payroll tax on wages above $250,000
Conventional Revenue, 2021-2030 (Billions) $808 $1,556 $1,556 $5,505 $1,890
Dynamic Revenue, 2021-2030 (Billions) $657 $1,302 $1,302 $4,677 $1,573
Gross Domestic Product (GDP) -0.28% -0.36% -0.36% -1.17% -0.41%
Capital Stock -0.33% -0.42% -0.42% -1.33% -0.48%
Full-time Equivalent Jobs -350,400 -462,500 -462,500 -1,570,000 -532,500

Individual Income Tax Proposal Estimates

The major 2020 Democratic presidential candidates have each proposed changes to the individual income tax, one of the largest sources of federal revenue.

These proposals range from raising the top marginal income tax rate to 39.6 percent, imposing surtaxes on labor and investment income, and repealing provisions of the Tax Cuts and Jobs Act (TCJA).

See Full Individual Income Tax Estimate
Summary of Democratic Presidential Individual Income Tax Proposal Estimates

Source: Tax Foundation General Equilibrium Model, November 2019.

  Biden Sanders
Plan Details Raise 37% tax bracket rate to 39.6% Impose a 52% tax rate on incomes over $10 million, impose a 4% income-based premium on all income, repeal the Section 199A pass-through deduction
Conventional Revenue, 2020-2029 (Billions of Dollars) $109.0 $3,168.4
Dynamic Revenue, 2020-2029 (Billions of Dollars) $84.0 $2,169.5
Gross Domestic Product (GDP) 0% -2.04%
Capital Stock 0% -2.54%
Full-time Equivalent Jobs 0 -1,532,000

Capital Gains Tax Proposal Estimates

See Full Capital Gains Tax Estimate
Summary of Democratic Presidential Capital Gains Tax Proposal Estimates
  Biden Sanders
Plan Details Repeal step-up in basis. Raise capital gains taxes to ordinary income rates for those with >$ 1 million Raise capital gains taxes to ordinary income rates for those with >$250,000. Institute a 4 percent income premium on capital gains
Conventional Revenue, 2020-2029 (Billions of Dollars $451 $28
Dynamic Revenue, 2020-2029 (Billions of Dollars) $418 -$10
Gross Domestic Product (GDP) -0.03% -0.07%
Gross National Product (GNP) -0.21% -0.20%
Capital Stock -0.02% -0.08%
Full-time Equivalent jobs -400 -41,000

Source: Tax Foundation General Equilibrium Model, November 2019.


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