Updated on September 25, 2020 to include Appendix A
Summary: Presidential candidate Joe Biden’s campaign has released a substantial list of policy proposals. PWBM finds that over the 10-year budget window 2021 – 2030, the Biden platform would raise $3.375 trillion in additional tax revenue and increase spending by $5.37 trillion. Including macroeconomic and health effects, by 2050 the Biden platform would decrease the federal debt by 6.1 percent and increase GDP by 0.8 percent relative to current law. Almost 80 percent of the increase in taxes under the Biden tax plan would fall on the top 1 percent of the income distribution. Please see our analysis of the estimate for more information on the proposals.
Table 1. Overall Revenue and Spending Effects of the Biden Platform, 2021-2030
Spending/Revenue Category
Billions of $
Total Tax
3,375.4
Corporate
1,438.5
Payroll
992.8
Individual Income
944.0
Total Spending
5,370.0
Education
1,929.5
Infrastructure and R&D
1,600.8
Housing
650.0
Social Security Benefits
290.7
Healthcare - Prescription Drugs
-1,253.0
Healthcare - Other New Spending
1,605.0
Paid Leave*
547.0
Notes: For PWBM's long-term macroeconomic modeling, all of Biden's provisions for new spending on Education, Social Security Benefits, and Healthcare (Spending and Drugs) are assumed to continue into the future past 2031. Some Housing Assistance provisions and all Infrastructure and R&D provisions end in 2031. Paid Leave is not incorporated into PWBM's macroeconomic modeling.
Table 2. Distribution of Federal Taxes for 2021 and 2026
2a. Including the Distribution of Corporate Income Tax at the Household Level:
Income group
2021
2026
Income Threshold
Effective Tax Rates (Income, Payroll, Corporate)
Income Threshold
Effective Tax Rates (Income, Payroll, Corporate)
pre-TCJA
Current Law
Biden Plan
pre-TCJA
Current Law
Biden Plan
Bottom quintile
-
2.5%
1.1%
1.6%
-
2.6%
2.2%
2.8%
Second quintile
$17,083
10.8%
9.1%
9.4%
$19,227
11.0%
10.9%
11.3%
Middle quintile
$39,568
18.9%
16.9%
17.3%
$45,114
18.9%
18.6%
19.1%
Fourth quintile
$74,410
21.3%
19.4%
19.8%
$84,637
21.2%
20.9%
21.3%
80-90%
$135,893
24.7%
22.8%
23.2%
$153,570
24.7%
24.4%
24.9%
90-95%
$197,982
26.6%
24.5%
25.1%
$226,124
26.5%
26.0%
26.6%
95-99%
$282,663
30.4%
26.5%
27.6%
$322,799
30.0%
29.3%
30.6%
99-99.9%
$710,028
34.5%
30.7%
37.4%
$788,945
33.8%
32.5%
37.5%
Top 0.1%
$3,293,826
34.6%
30.6%
43.0%
$3,597,440
34.5%
32.0%
41.9%
Notes: (1) When distributing the corporate income tax to households, we assume that 75 percent of the tax falls on capital owners and 25 percent falls on workers in the form of lower wages over time. These lower wages and lower investment returns are included in the "effective tax rate" measure shown above.
(2) For the purposes of this modeling, we hold income constant between the each of the different policy scenarios. E.g., expiring provisions under current law mean that taxpayers will realize certain forms of income earlier, boosting their 2021 income—this type of behavioral effect is disabled in PWBM's tax model for this analysis.
(3) Values represent effective tax burdens under the pre-TCJA (2017), current law, or Biden plan tax codes if each were implemented in 2021 and 2026.
2b. Not Including the Corporate Income Tax:
Income group
2021
2026
Income Threshold
Effective Tax Rates (Income, Payroll, Corporate)
Income Threshold
Effective Tax Rates (Income, Payroll, Corporate)
pre-TCJA
Current Law
Biden Plan
pre-TCJA
Current Law
Biden Plan
Bottom quintile
-
0.6%
0.3%
0.3%
-
0.8%
1.0%
1.0%
Second quintile
$16,913
9.5%
8.6%
8.6%
$19,003
9.8%
10.1%
10.1%
Middle quintile
$39,379
17.7%
16.4%
16.4%
$44,742
17.7%
17.9%
17.9%
Fourth quintile
$73,957
20.0%
18.9%
18.9%
$84,043
20.0%
20.2%
20.2%
80-90%
$135,184
23.2%
22.2%
22.2%
$152,291
23.4%
23.6%
23.6%
90-95%
$196,420
24.8%
23.8%
23.8%
$223,896
24.8%
25.0%
25.0%
95-99%
$279,815
27.8%
25.5%
25.9%
$318,193
27.8%
28.0%
28.5%
99-99.9%
$698,956
30.3%
29.2%
34.8%
$772,112
30.2%
30.5%
34.2%
Top 0.1%
$3,213,478
27.0%
27.8%
38.4%
$3,480,020
28.0%
28.2%
35.9%
Notes: (1) For the purposes of this modeling, we hold income constant between each of the different policy scenarios. E.g., expiring provisions under current law mean that taxpayers will realize certain forms of income earlier, boosting their 2021 income—this type of behavioral effect is disabled in PWBM's tax model for this analysis.
(2) Values represent effective tax burdens under the pre-TCJA (2017), current law, or Biden plan tax codes if each were implemented in 2021 and 2026.
Table 3a. Macroeconomic Results, Immigration and Tax Only
Year
GDP
Capital
Average Hourly Wage
Hours Worked
Debt Held by the Public
Total Scenario Effect (% Difference from Baseline)
2030
0.8%
0.3%
0.3%
1.4%
-6.9%
2040
1.0%
0.9%
0.3%
1.7%
-13.5%
2050
1.5%
1.6%
0.2%
2.3%
-17.3%
Table 3b. Macroeconomic Results, Adding Public Investment*
Year
GDP
Capital
Average Hourly Wage
Hours Worked
Debt Held by the Public
Marginal Effect (pp. Difference from Previous Scenario)
2030
0.4%
0.3%
0.2%
0.1%
8.0%
2040
0.5%
-0.2%
0.3%
0.1%
12.1%
2050
0.4%
-0.6%
0.4%
0.0%
12.8%
Total Scenario Effect* (% Difference from Baseline)
2030
1.1%
0.6%
0.5%
1.6%
1.2%
2040
1.5%
0.7%
0.7%
1.8%
-1.5%
2050
1.8%
1.0%
0.5%
2.3%
-4.5%
* Includes Biden immigration, tax, and public investment plans
