A Joe Biden presidency will potentially impact the personal finances of millions of Americans, from how much they pay in income taxes to whether they can pare college debt – or afford college at all.
Those who stand to benefit most are the middle class and low-wage earners, experts say, while the affluent will likely pay more.
“Biden ramps up government spending on education, health care and other social programs, the benefits of which largely go to those in the bottom half of the income distribution,” Moody’s Analytics wrote in a report for investors before Biden was officially the president-elect. “Meanwhile, he meaningfully increases taxes on the well-to-do, financial institutions and businesses to help pay for it.”
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Here’s what we might expect from Biden over the next four years:
Biden has repeatedly said that Americans earning less than $400,000 a year won’t pay a cent more in taxes. But those earning above that threshold will lose their tax cuts and likely pay a bit more.
Biden has recommended raising the marginal income tax rate from 37% to 39.6% for the nation’s highest pool of earners, according to The Tax Foundation and the Committee for a Responsible Federal Budget.
Americans with more than $1 million in total income would see income brought in from dividends, as well as capital gains, taxed like their wages, and pare the itemized deductions taxpayers could declare, Moody’s says.
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Meanwhile, Biden campaign spokesman Michael Gwin has told Reuters that Biden will effectively lower taxes for the middle class by giving them refundable credits that reduce what they pay for health care coverage and help them to purchase their first home and pay for child care.
Most immediately, to deal with the economic crisis that has erased millions of jobs and left many Americans struggling to pay their bills, Biden says he will expand the Child Tax Credit to $3,000 for each child ages 6 to 17, and $3,600 for the youngest children. That would mean according to his website that a teacher and electrician with a baby and middle schooler would receive $6,600.
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The Affordable Care Act, which provides health care for millions of Americans, hangs in the balance with the U.S. Supreme Court set to weigh in on Nov. 10 on a lawsuit brought by several Republican-led states and the Trump administration to abolish the ACA.
But Biden has a plan for not only salvaging the law but making it stronger.
“What I’m going to do is pass Obamacare with a public option,” Biden said in the final presidential debate against President Donald Trump. “It becomes Bidencare.”
He says Americans can maintain private insurance, but a public option will also be available, particularly benefiting Americans who couldn’t access Medicaid because they live in the dozen states that didn’t allow them to do so under the ACA.
Biden has said he would raise the subsidies people can use to help them buy coverage through ACA marketplaces. He says no family will have to spend more than 8.5% of their earnings on health coverage because of refundable tax credits for their premiums.
And Americans could further cut down on their out-of-pocket costs because a Biden administration says it will lower the price of prescriptions by negotiating drug prices.
However, “most of Biden’s health care plan would require legislation, so passing any of it would require Democrats to control the Senate as well as the House,” Oxford Economics says. “In the absence of legislation, we expect Biden to reverse Trump’s executive actions that have curtailed the ACA.”
A sizable chunk of a family’s budget goes toward covering the cost of housing.
Nearly half of Americans who rent pay more than 30% of their income on those monthly payments, according to the Center for American Progress, limiting how much they have left to spend on other necessities like groceries or education.
Biden plans to provide a refundable tax credit of up to $15,000 that will help Americans pull together a down payment to purchase a home, shore up rental aid provided by the federal government, and dedicate $10 billion toward expanding a tax credit that spurs the building or revamping of rental housing for low wage earners.
Biden has talked about making sure Americans don’t spend more than 30% of their income on housing. Biden says he will seek a tax credit for renters who make too much to receive Section 8 vouchers but still need help covering their rent, and fully fund the Section 8 program for those who qualify.
Biden also has proposed several steps to root out the systemic racism that has hindered the ability for people of color, particularly African Americans, to buy or hold onto property – from onerous interest rates that leave them vulnerable to falling behind on payments, ending up in foreclosure, to biases that undervalue homes simply because they are owned by Black people.
Bias in lending, as well as predatory financing that focused on Black Americans in the years before the 2008 recession, have been key reasons for the wide wealth gap between Blacks and whites, experts say, leaving African Americans at a disadvantage when it comes to passing down resources to future generations or funding the launch of a business.
Biden says he will create a national standard for housing appraisals. He will also pursue legislation that will prohibit the lending industry from pushing buyers into mortgages they cannot afford and restore power to the Office of Fair Lending and Equal Opportunity to hold lenders who’ve discriminated against home buyers accountable.
Child care, free early education
Biden has pledged to limit and cap child care costs for many families.
He will offer tax credits to help low-income and middle-class families pay for child care. Parents earning less than $125,000 annually can get back up to half what they spend on child care for kids under age 13. The cap is $8,000 for one child or $16,000 for two or more children. And families making up to $400,000 can qualify for partial credits.
For children under the age of 5, Biden supports the Child Care for Working Families Act, in which a sliding scale of subsidies will be set up so less affluent families can pay what they can afford.
Additionally, no family with children under 5 and income less than 1.5 times the state average would pay more than 7% of their earnings for child care. That amounts to $45 a week at most for the average household according to Biden’s campaign site.
Biden is proposing free preschool for 3- and 4-year-olds.
Biden wants to make community college and comparable training programs free. And students from households earning less than $125,000 a year will not have to pay tuition if they attend four-year public colleges and universities.
He also wants to raise the value of Pell Grants, doubling the top amount students can receive.
Biden says that he will reduce the debt burden carried by students after they graduate. After deducting the earnings they need to pay taxes and for essentials like housing and groceries, borrowers will pay 5% of their income above $25,000 toward federal loans taken out to fund an undergraduate degree.
If they’ve been diligent about repaying their debt, after 20 years, the balance of their loans will be forgiven.
Borrowers who don’t earn more than $25,000 annually won’t have to make payments on those federal loans, and won’t have to worry about accumulating interest.
Individuals making $25,000 or less a year will not owe any payments on their undergraduate federal student loans and also won’t accrue any interest on those loans.
He would also improve the Public Service Loan Forgiveness Program, and start a new initiative that forgives $10,000 worth of undergraduate or graduate student debt for every year a borrower commits to national or community service. The cap would be five years.
Follow Charisse Jones on Twitter @charissejones
This article originally appeared on USA TODAY: Joe Biden plans to cut taxes, boost health care and reduce college debt during his first term