Who gets a big tax break under Biden’s plan? These parts of California have most to gain
The California congressional district that would benefit most next year from President Joe Biden’s tax plan is represented by a Republican, David Valadao of Hanford.
And the district in the state that would benefit least is represented by a Democrat, the Los Angeles area’s Ted Lieu.
California has 53 congressional districts, 11 represented by Republicans. Taxpayers in eight of those GOP-held districts — including the Bakersfield-based district of House Republican Leader Kevin McCarthy — would see net tax reductions.
But on average, people living in House Speaker Nancy Pelosi’s San Francisco district would see a tax increase.
The House plans next week to take the first step toward passing Biden’s budget plan, a $3.5 trillion package that could later this year include tax breaks for the middle and lower classes and increases for many corporations and the wealthy.
Biden has vowed not to increase taxes on anyone earning less than $400,000 annually while providing breaks to people with lower incomes.
His proposals include increasing the tax rate on top incomes, now 37%, to 39.6%, the rate in effect before the 2017 Republican-authored tax cuts.
Biden also wants to extend this year’s boost in the Child Tax Credit to 2025, make permanent this year’s increases in the Child and Dependent Care tax credit and raise the corporate tax rate, now 21% to 28%.
The Tax Foundation, regarded as somewhat conservative, analyzed the impact of all of Biden’s tax proposals on California’s districts.
But how much anyone pays or saves all depends on where one lives and how much income they earn.
Tax breaks in Republican districts
Valadao is no fan of the Biden package, yet the analysis found that the average taxpayer in his district would save $1,754, or 3.8% of their adjusted gross income, next year.
Valadao was not convinced the plan would be much help to people in his district.
“I will not support a reckless tax plan that gives more power to the government, increases national debt, and amends policies that strengthen our economy,” he said.
Republicans object to the big budget bill’s spending and expansion of government. McCarthy called it a “socialist spending binge that will crush families, dismantle our economy, and reshape our country in the worst possible way.”
The average tax cut in McCarthy’s district would be $634. Taxpayers in the district represented by Rep. Devin Nunes, R-Tulare, would see an average cut of $515.
Valadao’s district is estimated to be by far the biggest beneficiary of the Biden tax plans. Second is the Fresno area district of Democratic Rep. Jim Costa, where the average tax cut would be $1,492, or 2.9% of AGI.
Other large reductions: Districts represented by Lucille Roybal-Allard, D-Commerce, $1,238 or 2.7%; Juan Vargas, D-Chula Vista, $1,267 or 2.7% and Nanette Barragan, D-Carson, $1,150 or 2.3%.
Four of the five biggest tax increases would fall to districts represented by Democrats. Topping the list is Lieu’s district, where the average tax increase would be $8.603, or 3.3%.
The district of Rep. Anna Eshoo, D-Palo Alto, would see an average tax increase of $8,794 or 2.6%. Pelosi then ties on AGI share with Rep. Michelle Steel, R-Huntington Beach. Steel’s constituents would pay an average of $3,051, or 2.2%, more.
Misleading tax data?
Critics of the data say it’s misleading.
Under the Biden plan, “no one making under $400,000 is going to have their taxes raised, so when you take millionaires and billionaires out of the mix, Democrats’ tax cuts for hard-working, middle class families in every congressional district are much bigger and broader than these averages show,” said Pelosi spokesman Henry Connelly.
The Tax Foundation used 14 Biden proposals in its analysis. Among the biggest potential breaks is expanding the Child Tax Credit through 2025.
The credit was increased this year, and qualifying families could receive up to $250 to $300, depending on a child’s age, each month this year starting in July.
In Valadao’s district, several credits would be available because the average adjusted gross income is estimated to be $45,734.
The average child tax credit would be $1,747, the analysis said. Taxpayers would also benefit from making the child and dependent care tax credit permanent, and expanding the Earned Income Tax Credit. Some of the breaks would be offset a bit by the impact of corporate tax increases.
Lieu’s district offers a sharp contrast. The average AGI is listed as $262,256. Raising the top income tax bracket, now 37%, to 39.6% would mean a tax increase averaging $1.642. The corporate tax rate increase would wind up costing district taxpayers $2,998.
But the credits available to middle and lower income people would mean less. The child tax credit, which is phased out at higher incomes, would provide an average break of $160, and the expanded earned income tax credit would save an average of $18.
Democrats are largely unified behind increasing taxes for the wealthy and helping those earning less, and are eager to paint Republicans as staunchly opposed.
“Republicans are once again busy opposing middle class tax cuts for their constituents and trying to block key supports for families in their communities,” Connelly said.
Republicans see things very differently. “I have no doubt we will see a second wave of U.S. jobs, investment, and research overseas,” Rep. Kevin Brady of Texas, top Republican on the tax-writing House Ways and Means Committee, told CNBC last week. “Secondly, yes, it drives up taxes on almost all Americans in a significant way.”.
This story was originally published August 23, 2021 at 5:25 AM.
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