A new study from the Penn Wharton Budget Model revealed that President Joe Biden’s “American Families Plan” will cost about $700 billion more than the White House originally estimated and will only raise $1.3 trillion in new tax revenue over the same period.
May 5, 2021
A new study from the Penn Wharton Budget Model revealed that President Joe Biden’s American Families Plan (AFP) will cost about $700 billion more than the White House originally estimated — bringing the total cost of the plan to $2.5 trillion.
The study also concluded the AFP will only raise $1.3 trillion in new tax revenue over the same period, putting the Biden administration $1.2 trillion short of the money they need to pay for their plan.
Penn Wharton Budget Model: “PWBM projects that the American Families Plan (AFP) would spend $2.5 trillion, about $700 billion more than the White House’s estimate, over the 10-year budget window, 2022-2031. We estimate that AFP would raise 1.3 trillion in new tax revenue over the same period.”
In April, President Biden introduced his American Families plan as a $1.8 trillion investment into things like education and child care that will be paid for by raising taxes on wealthy Americans.
But other independent analyses have shown that Biden’s proposals to raise the corporate tax rate and repeal the “step-up in basis” tax provision will hurt economic growth and negatively impact the middle class.
Tax Foundation: “An increase in the federal corporate tax rate to 28 percent would raise the U.S. federal-state combined tax rate to 32.34 percent, highest in the OECD and among Group of Seven (G7) countries, harming U.S. economic competitiveness and increasing the cost of investment in America. We estimate that this would reduce long-run economic output by 0.8 percent, eliminate 159,000 jobs, and reduce wages by 0.7 percent.”
American Farm Bureau Federation: “A new report released today by EY finds that repealing the step-up in basis tax provision would damage the gross domestic product (GDP) and significantly decrease job creation.”
Now that President Biden could be $1.2 trillion short, the big question is: Will the plan be tweaked to add additional tax hikes that damage the economy and hurt hard-working Americans?