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Fact check: Comparison of proposed taxes under Biden and Trump looks at highest tax bracket only

Correction, October 11, 2020

Reuters Fact Check. REUTERS

An earlier version of this article incorrectly referred to the Atlanta Journal-Constitution as the ACJ rather than the AJC. This has been corrected.

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Thousands of social media users are sharing posts which claim that taxes will be much higher under Democratic presidential nominee Joe Biden than under U.S. President Donald Trump. The posts cite figures that are correct, but lack context: they do not explain that the rates mentioned only relate to the highest tax bracket, and that the income and payroll tax figure only applies to business owners.

The posts ( here , here , here , here , here , here ) show a close-up picture of part of a newspaper article from the Atlanta Journal-Constitution (AJC) called “Comparing Biden tax plan vs. Trump policy”. The following comparison of tax figures from the article is circled in the picture: “Corporate Taxes/ Trump: 21.0%/ Biden 28.0%/ Income and Payroll Taxes/ Trump: 37.0%/ Biden: 52.0%*/ Small-Business Taxes/ Trump: 29.6%/ Biden: 39.6%/ Capital Gains and Dividend Tax/ Trump: 23.8%/ Biden: 43.4%”

Some posts are accompanied by captions such as, “Tag an undecided voter!”, “Taxes are going to be insane under Biden” or “Your choice America…”, while others have no captions.

The online version of the original AJC article, written as an opinion piece by Wes Moss, described as “a supporter of Donald Trump”, introduces the figures with the following sentence: “Keep in mind, these figures are for the highest or maximum tax bracket for each of the four categories.” ( here ) However, this information is not visible in the photograph of part of the article that is shared on social media. The posts also do not make it clear that the figures apply only to the highest tax bracket.

Biden plans to use taxes on the wealthy and corporations to pay for $3.2 trillion in promised investment in infrastructure, higher education and healthcare if he captures the White House ( here ).

Regarding the figures in the AJC article, Biden is indeed planning to increase corporate tax from 21% to 28%, as explained by the Committee for a Responsible Federal Budget and the Tax Foundation, which are independent public policy think tanks based in Washington, D.C. ( here , here ).

The figure for income and payroll tax is correct only for business owners in the highest tax bracket: Biden plans to increase the top income tax rate from 37% to 39.6%. Biden also plans to subject wages above $400,000 to a 12.4% payroll tax, half of which is paid by employers and half paid by employees ( here ).

The AJC article explains via an asterisk, which is not visible in the photo shared on Facebook, that the 52.0% income and payroll tax figure represents the tax owed by American business owners in the highest tax band as they would pay both sides of this payroll tax ( here ).

According to the U.S. Small Business Administration, the most common types of state and local tax requirements for small businesses are income and employment taxes, however, tax laws vary by location and business structure ( here ). To explain its small-business tax calculation, the AJC article says, “Biden’s small-business tax increase comes via reducing or eliminating existing tax deductions for these companies.” This seems to imply that the figure could be referring to the income tax rate on business income: under the TCJA business owners can currently deduct 20% of Qualified Business Income against their income until the end of 2025, which lowers the effective top individual income tax rate on business income from 37% to 29.6% ( tpc.io/3c2NbzH ). Biden would maintain the current deduction for those earning under $400,000 per year but phase out the deduction for higher earners, and restore the top individual income tax rate from 37% to 39.6% ( here ).

Currently, the top rate of capital gains and dividend taxes is 20%, plus a 3.8% net Investment Income Tax (NIIT). Biden has proposed to tax capital gains and dividends as ordinary income at a rate of 39.6% for individuals and couples earning over $1 million, which comes to 43.4% with the NIIT ( here ).

Reuters recently debunked other claims relating to Biden’s tax plans here here , and here ).

VERDICT

Missing context. The full AJC article explains that the figures relate to the highest tax bracket and that the income and payroll tax figure only applies to business owners. The figures are correct for these groups. However, the fact about who the tax rates apply to is not visible in the photo shared on social media, and is also not included in the captions accompanying the posts.

This article was produced by the Reuters Fact Check team. Read more about our fact-checking work here .

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