FactCheck: Ads distort how much Biden’s tax plans could cost 'your family'
The 2022 budget proposed by President Joe Biden would redistribute income, hitting high-income earners with tax increases and providing refundable tax credits to low- and middle-income Americans.
Ads from the conservative Club for Growth targeting nine vulnerable Democrats and one centrist Republican in the House, however, distort the impact of the Biden plan on taxpayers, warning that Biden’s plan “could cost your family” thousands or even tens of thousands of dollars. It could, but it probably won’t.
In the first year of Biden’s proposed budget, 2022, nearly nine out of 10 households would see a tax cut, according to the Tax Policy Center. By the 10th year, 2031, only a quarter of households would be getting a tax cut, but still, most households would, on average, see a tax increase of $430 or less.
Those with very high incomes, specifically the less than 1% of Americans making over $1 million per year, would bear the majority of the tax increases. Those people could, on average, see tax increases in the hundreds of thousands of dollars.
The ads from Club for Growth also cherry-pick data from the pro-business Tax Foundation, pointing in some cases to projections for average statewide tax increases when the same analysis shows thousands of dollars in average tax savings in the congressional districts of the legislators being targeted by the ads. In some other cases, when the average tax increase in a congressional district is larger than the state average, Club for Growth cites the higher figure.
The Club for Growth ads blame Democrats’ COVID-19 relief spending for driving up inflation and claim they are now “pushing a scam they call reconciliation” that amounts to a “$3 trillion tax hike” that “could cost your family” thousands. The group told Fox Business it spent $300,000 to run the ads on TV and digital media for one week starting in mid-September, part of a $2 million campaign to oppose the Democrats’ social spending package.
The figures cited in the ads for how much Biden’s plans “could cost your family” are individualized for the legislator being targeted, based on an analysis by the Tax Foundation of how the Biden plans would affect the taxes of people in various states and congressional districts over 10 years. Although the ad calls the Biden proposal a “$3 trillion tax hike,” the Tax Foundation says it is a net $1.3 trillion tax increase. Specifically, it says the Biden fiscal year 2022 budget “would levy $2.3 trillion in new taxes on high-income earners and businesses and provide $998 billion in refundable tax credits to low- and middle-income households.”
And, the report says, “The resulting redistribution of income would involve many winners and losers, not only across different types of taxpayers but also geographically across the country.” So, how would it affect “your” family’s taxes, as the ad says?
Cherry-picking the data
In the case of ads targeting Democratic Texas Reps. Filemon Vela, Vicente Gonzalez and Henry Cuellar, the ads claim the plans “could cost your family $6,800.” A graphic on the screen reads, “$6,800 higher taxes on your family.”
The $6,800 figure comes from the Tax Foundation’s June 30 analysis, “The Impact of the Biden Administration’s Tax Proposals by State and Congressional District.” According to its analysis of the Biden proposal as it existed at that time, the average tax filer in Texas would pay an additional $6,818 in federal taxes over the next 10 years.
But that’s not the case in the congressional districts of the three legislators targeted in the ads.
According to Tax Foundation estimates, the average effect of the Biden budget for tax filers in Vela’s 34th Congressional District would be a cumulative $5,700 tax cut over 10 years. In Cuellar’s 28th District, the Biden plan would amount to a $5,360 tax reduction over 10 years. And in Gonzalez’s 15th Congressional District, the average tax cut would come to $4,700 over 10 years.
That’s right, in the markets where those ads ran against incumbent Democrats in southern Texas, the Tax Foundation estimated the tax burden would — on average — drop by thousands of dollars, rather than increase by thousands, as the ads say.
Similarly, a version of the ad from Club for Growth run against Democratic Rep. Jared Golden of Maine claims the Biden tax plans “could cost your family over $2,300.” The Tax Foundation concluded that under Biden’s plans, tax filers in Maine overall could pay $2,370 more over 10 years on average. But not in Golden’s congressional district. In the 2nd Congressional District that Golden represents, the Tax Foundation estimates tax filers would realize an average $2,548 tax reduction over 10 years.
There are only two congressional districts in Maine, so how is that possible? It’s simple, there are more high-income earners in the 1st Congressional District, which includes Augusta and Portland. In the 1st District — which has a median income of $67,392, more than $16,000 higher than in the 2nd District — tax filers would, on average, pay $6,370 more over 10 years, according to the Tax Foundation.
Interestingly, in instances where the Tax Foundation estimated the average tax increase was higher in the targeted candidate’s congressional district than in the state in general, Club for Growth cited the higher congressional district number.
So, for example, in an ad targeting Rep. Josh Gottheimer, the ad says Biden’s plans could result in a $25,000 tax increase for “your family.” That’s the 10-year tally in Gottheimer’s 5th Congressional District in northern New Jersey, according to the Tax Foundation, where the median household income tops $110,000. Statewide, the average tax increase is $13,147 over 10 years, according to the Tax Foundation.
Similarly, an ad targeting Democratic Rep. Susie Lee in Nevada says the Biden plan “could cost your family $19,000.” That’s the Tax Foundation’s tally for the 10-year average in Lee’s 3rd Congressional District; it is $11,698 statewide.
But even in those congressional districts with high average tax increases, the chance that those amounts would fall on “your family” is statistically unlikely.
Tax increases for typical families
On the individual tax side, proposed changes in Biden’s budget include raising the top marginal income tax rate from 37% to 39.6%, which the Tax Foundation says would “apply to income over $452,700 for single filers, $481,000 for head of household filers and $509,300 for joint filers.” The plan also calls for taxing long-term capital gains “as ordinary income for taxpayers with adjusted gross income above $1 million.”
The Biden budget also proposes corporate tax increases, including raising the top corporate tax rate from 21% to 28% and imposing a 15% corporate minimum tax on companies with over $2 billion in net income.
While most of the tax increases would fall on very high-income earners, the Tax Policy Center’s Leonard Burman notes that a proposed corporate tax increase or a financial transaction tax would raise taxes on shareholders and would affect “millions of middle-class people who own 401(k) plans.”
“Biden’s plan targets direct tax increases on those earning more than $400,000, and that’s what we see, but others are affected indirectly through impacts on the broader economy,” William McBride, vice president of federal tax and economic policy at the Tax Foundation, told us in an email.
So, for example, the Tax Foundation’s analysis of the impact of Biden’s budget assumes that in the long run, corporate taxes are split evenly between capital and labor income.
Still, the tax increases cited in the Club for Growth ads are unlikely to be so high for the typical taxpayer.
“‘Could’ some family pay $25,000 more in taxes? Sure,” Howard Gleckman, a senior fellow in the Urban-Brookings Tax Policy Center, told us via email. “But would a typical family pay anything like that? Not at all.”
In the first year of Biden’s budget plan, 2022, the average tax increase would be $1,190 (including the effects of corporate tax increases on workers and shareholders), Gleckman said, citing a Tax Policy Center analysis published on June 9. But the higher taxes would mostly hit very high-income earners. People making less than $200,000 would, on average, see an overall tax cut. That’s 88.4% of all taxpayers. Those making more than that would, on average, see a tax increase. And the country’s top earners — those making more than $1 million a year — would see their tax burden increase an average of nearly $270,000.
More people would see a tax increase after the proposed temporary expansions of the child tax credit expire in 2026. By 2031, only about a quarter of households — those making less than $30,000 — would see a tax cut, according to a Tax Policy Center analysis. The increase for middle-income people would range from an extra $10 in taxes, on average, for people making between $30,000 and $40,000 to an extra $860 for those making between $100,000 and $200,000.
Again, the biggest increases would be borne by taxpayers with the highest incomes, with those making over $1 million paying an average of $234,130 more. The roughly 2% of households making more than $500,000 would shoulder 72.6% of the tax increase.
“Beware of the average: If I owe $200,000 in taxes and you owe nothing, our average tax bill is $100,000,” Gleckman noted.
“There is another way to look at this,” Gleckman said. “If you ignore the corporate tax increases and just look at the effects of individual income and payroll tax changes, the average tax increase is less than $500 [in 2022]. But households making $500,000 or less would pay less in tax on average than under current law.”
That’s a little over 98% of households on average seeing tax cut in 2022, according to a TPC analysis. Even by 2031, only those making more than $200,000 (12.8% of households) would, on average, see a tax increase, under that scenario.
The lone Republican targeted in the “Pickpocket” ads is Rep. Adam Kinzinger of Illinois. Kinzinger is on the outs with Republican leadership after voting to impeach then-President Donald Trump and accepting an appointment by Speaker Nancy Pelosi to sit on the select committee investigating the Jan. 6 Capitol riot. He has publicly endorsed the bipartisan infrastructure bill passed by the Senate in August. But he opposed the $1.9 trillion COVID-19 relief bill that was passed almost entirely along partisan lines on March 10. And on Aug. 24, he voted against a $3.5 trillion spending blueprint proposed by Democrats.
We reached out to Club for Growth for comment, but we did not get a response.