Understandably lost in the wake of Wednesday’s shocking events was the fact that, with two election wins in Georgia, Democrats took control of the Senate to go with control over the House and presidency. Though tax policy may have taken a backseat in these Georgia elections, the results raised the chances of significant tax hikes, and the undoing of progress made in the 2017 Tax Cuts and Jobs Act (TCJA), substantially.
The most likely tax hikes that President Biden will push for with a Democratic Congress are increases to income tax rates. During the campaign, Biden proposed to raise the top individual income tax rate from 37 percent to 39.6 percent. Biden’s tax plan also included a provision that would subject annual income above $400,000 to Social Security taxes (currently only annual income up to $142,800 is subject to these taxes).
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