CNBC: Two Democrats come up with a new plan to tax income over $2 million

Two Democrats come up with a new plan to tax income over $2 million

BY YLAN MUI - 11/07/2019 

Democrats are finding new ways to go after the wealthy.

On Thursday, Sen. Chris Van Hollen of Maryland and Rep. Don Beyer of Virginia, both Democrats, released a plan for a new surtax on income over $2 million.

“The millionaires surtax is a sensible plan to restore fairness to the tax code, fight the rise of inequality, and fund important priorities for the American people,” Beyer said in a statement.

Their proposal would increase the tax rate on wages and capital gains by 10 percentage points for married couples with adjusted gross income of more than $2 million or individuals making more than $1 million. That would hike the top household tax rate from 37 to 47 percent, while the capital gains rate would rise from 20 to 30 percent.

The proposal comes as Democratic presidential candidates Sens. Elizabeth Warren and Bernie Sanders have introduced wealth taxes that would hit high net worth individuals. Warren first set the bar for her wealth tax at $50 million in assets. Her rival, Sanders followed up with a plan to tax wealth over $32 million.

Initially, the newest plan would only hit the top 0.2 percent of households, the lawmakers said. That number is expected to grow to the top 0.3 percent by 2029. An analysis of the plan by the nonpartisan Tax Policy Center estimates it would raise $635 billion over a decade. Van Hollen said the proposal would help reverse inequities caused by the overhaul of the tax code that Republicans swept through Congress two years ago.

“Instead of being a boon for hiring and wages, the Trump plan has been a windfall for special interests and big corporations – making the gap between the rich and everyone else in the United States even wider,” Van Hollen said. “This isn’t what families in our country want or need.”

The proposal is backed by the progressive group Americans for Tax Fairness, which commissioned a survey by Hart Research to gauge support for the measure. The poll found that a slight majority of Republicans backed the idea, while 57 percent of Trump supporters were behind it. In addition, the survey showed 76 percent of independents supported the surtax.

The proposal sets an aggressive new marker for Democrats in the debate over where to draw the line in taxing the wealthy. A split has emerged among the presidential candidates over the best way to tackle income inequality, with more moderate candidates starting to criticize the concept of a wealth tax.

During the Democratic presidential debate in October, Sen. Amy Klobuchar of Minnesota and former Vice President Joe Biden pushed back against Warren’s plan to impose a 2 percent tax on wealth above $50 million and 3 percent on net worth over $1 billion.

When Warren asked why everyone on the stage besides Sanders and herself thought it was “more important to protect billionaires than it is to invest in an entire generation of Americans?” Biden hit back, saying, “No one is supporting billionaires.”

Klobuchar said a wealth tax is “not the only idea” for tackling income inequality.

Warren, however, has doubled down on her proposal. Last week, she called for doubling her tax on billionaires to 6% to pay for ‘Medicare for All.’

“Yes, billionaires will have to pay a little more,” Warren wrote in a Medium post. “But they will still likely pay less than what they would earn just from putting their assets into an index fund and doing nothing.”