Democrats float millionaires surtax in advance of 2020 election
With two of the leading Democratic presidential candidates competing to promote sweeping tax hikes on the ultra-wealthy, two other Democrats are advancing a more modest surtax on high incomes that supporters say has a better chance of actually becoming law.
The plan, introduced by Senator Chris Van Hollen of Maryland and Representative Don Beyer of Virginia, would place a 10 percent levy on income above $2 million, effectively raising the top rate on wages to 47 percent and 33.8 percent for capital gains.
Van Hollen, in a statement, called it “a simple system to ensure the wealthy are doing their part to invest in strengthening America’s future for everyone.”
The idea is the latest in a long string of Democratic plans to make wealthy Americans pay more. But with 2020 presidential candidates and members of Congress envisioning expensive programs to reshape U.S. health care, confront climate change, and offer free college educations, there has been a greater urgency to find ways to finance these ambitions — and that involves higher taxes on the rich.
The arsenal of proposals includes wealth taxes, financial transaction levies and capital gains changes.
The Van Hollen-Beyer surtax would raise about $635 billion over a decade, according to projections from the Urban-Brookings Tax Policy Center. By comparison, Senator Elizabeth Warren, one of the party’s leading presidential candidates, estimates that her wealth tax would raise $3.75 trillion over 10 years.
The latest plan, like the others, is likely to sit on a shelf until at least 2021 — or longer if Democrats don’t win the White House and Senate.
The surtax would involve a more moderate approach of raising the income tax rates on the top 0.2 percent of taxpayers, or about 329,000 Americans. It could be superimposed on the existing tax code, making it easier technically and politically for Congress to pass early in the term of a Democratic administration.
“This is something moderates can support,” said Frank Clemente, the executive director of Americans for Tax Fairness. “I don’t think we are going to see a wealth tax anytime soon.”
Warren has centered her campaign around her wealth tax, a 2 percent levy on fortunes more than $50 million and 6% on those with more than $1 billion. Senator Bernie Sanders, her rival on the Democratic Party’s left flank, has also introduced a wealth tax that kicks in at $32 million in assets with rates topping out at 8 percent. Critics of the plan say it could be easy to evade, difficult to administer and could run afoul of the Constitution.
A high-income surtax has been floated before, but never passed. In 2009, when Democrats controlled both chambers of Congress, and again in 2011, they proposed surtaxes on incomes above $1 million to pay for the Affordable Care Act and a stimulus bill.