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The sometimes-fuzzy $400,000 threshold in Biden’s tax plan

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“Anybody making more than $400,000 will see a small to a significant tax increase. If you make less than $400,000, you won’t see one single penny in additional federal tax.”

—President Biden, in an interview with George Stephanopoulos, March 16

During the 2020 presidential campaign, President Donald Trump claimed some 80 times that Joe Biden was going to raise taxes on all or most Americans. Biden had a consistent refrain — that was false, no one making less than $400,000 a year would face higher taxes.

Essentially, that level would mean about 98 percent of households would be spared from any new taxes. The top 2 percent — who earn one-quarter of adjusted gross income — would bear the burden of paying for Biden’s ambitious policies.

Biden appeared to reaffirm that stance during a recent interview. But then some comments by White House press secretary Jen Psaki muddied the waters a bit. The Wall Street Journal editorial page quickly accused Biden of a “tax bait and switch.”

What’s going on here?

The Facts

The day before Biden’s remarks, on March 15, Psaki appeared to be crystal clear. “The president remains committed to his pledge from the campaign that nobody making under $400,000 a year will have their taxes increased,” she said during a news briefing.

Notice the phrase “nobody making under $400,000 a year”? That was echoed by Biden’s phrasing the next day: “Anybody making more than $400,000 will see a small to a significant tax increase.”

The definition of “nobody” is no person. The definition of “anybody” is any person. Both of those words suggest individuals.

But the day after the interview, Psaki said something different. A reporter asked for a definition of anybody: “To clarify, did he mean individuals or households? Because it wasn’t very clear.”

“Families,” Psaki replied.

This response was puzzling, to say the least. Her response raised the possibility that individuals making less than $400,000 would face higher taxes.

During the campaign, The Fact Checker studied the Biden plan in detail. We tested the Biden campaign with a variety of scenarios that might cause a taxpayer making less than $400,000 to trigger higher taxes; Biden campaign officials insisted the plan would hold people harmless in such situations.

Various think tanks conducted studies of the Biden plan, and all said they based their calculations on the assumption that individuals making less than $400,000 would not face a tax increase.

“If the White House specifies a $200K single filer threshold for tax increases, that would be different from how we modeled the plan and understood the tax pledge for sure,” Garrett Watson of the Tax Foundation wrote in an email.

“Our reading of the campaign tax pledge was that the $400,000 cutoff applied to unmarried and married individuals alike,” said John Ricco of the Penn Wharton Budget Model. “We did not see anything that suggested it would vary based on marital status.”

An October Wall Street Journal article noted that “the campaign hasn’t specified all the details, so both single and married households could face the same $400,000 threshold.”

But a November analysis of the plan by the Tax Policy Center included this line: “Biden has clarified that he wants any tax increases to exempt all individual taxpayers with income under $400,000. Where possible, we have modified proposals to be consistent with that limitation.” The analysis includes a detailed appendix (B) of the assumptions and said “representatives of the campaign reviewed our assumptions and confirmed that most were consistent with Biden’s proposals,” in some cases providing more information about the proposal than was publicly available. “We assumed the threshold was for $400,000 for single, head of household, and joint filers,” said Gordon Mermin, principal research associate at the Tax Policy Center.

(Another Biden tax proposal would reintroduce Social Security payroll taxes once a person’s wages top $400,000. Currently, a person stops paying taxes once income reaches $142,800. That plan is clearly aimed at individual taxpayers.)

Not every campaign plan survives its way to legislation intact, of course. There have been other hints that the $400,000 line might be fuzzy.

As part of her confirmation hearings, Treasury Secretary Janet Yellen submitted answers to questions for the record. At one point, she wrote that Biden “clarified that the repeal of certain aspects of the tax law would be restricted only to those taxpayers making more than $400,000 a year, with a firm commitment that taxpayers earning less than this amount would not see their taxes increase.” That would seem to suggest individuals.

But at another point, Yellen also referred to families. “President Biden has stated that he will not ask families making under $400,000 per year to pay more in taxes,” Yellen wrote.

Meanwhile, Heather Boushey, a member of the White House Council of Economic Advisers, sidestepped the question in a recent interview with Bloomberg TV about the level of income that would affect individuals. “All the details are still to be worked out,” she said. “This is an ongoing conversation, so I can’t speak to specifics at this point.”

Naturally, we queried the White House for an explanation. A White House official told The Fact Checker: “President Biden’s plan will not raise taxes on anyone making under $400,000.”

The definition of “anyone” is “any person.” That would cover individual taxpayers.

The Bottom Line

The White House clearly understands that this was a memorable promise made by the president — one he reiterated just last week. Despite the confusion spawned by various administration references to “families,” the promise appears to remain intact. We will be watching carefully as the legislative sausage-making begins.

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