Reps. Alexandria Ocasio-Cortez and Jan Schakowsky are planning to introduce legislation that would practically double the country’s top individual tax rate on top earners to 59% as Democrats continue pounding the wealth inequality drum heading into 2020.
According to a Bloomberg report, the bill is still being drafted and also would increase capital gains taxes, making them equal to income taxes, as well as a move to what they’re calling a “mark-to-market” system. That would require people to pay taxes annually on the appreciation of their investments, real estate and all business holdings.
According to Ocasio-Cortez and Schakowsky, their bill would correct “the most glaring injustice” of the U.S. tax code, which they say is investors paying lower taxes than nurses and electricians, they said Friday.
They’re planning to introduce the bill in January and it would mark a significant tax hike, particularly for the most well-off Americans and even middle-income citizens who happen to earn money off of investments.
The current top tax rate in the U.S. is 37%, and the long-term capital gains rate is 23.8%, which already includes a tax to help pay for Obamacare.
Ocasio-Cortez, who has called capitalism “irredeemable,” started beating the drum for higher taxes on the wealthy last January when she suggested a 70% flat tax rate on earnings above $10 million a year. When you combine the proposed 59% income tax with federal payroll and local taxes, the country’s top earners would effectively pay that 70%, Schakowsky said while speaking at an Urban-Brookings Tax Policy Center event in Washington.
According to Ocasio-Cortez and Schakowsky, the tax hike would raise more than $2 trillion over a decade and “maybe even more.”
The Democrats are clearly preparing a massive overhaul to the U.S. tax system should they take back the White House and Senate in 2020 while maintaining their majority in the House of Representatives. Their tax increases would fund a number of social programs and giveaways, likely including Medicare for All, which is projected to cost upward of $30 trillion.
In addition to this bill, Rep. Don Beyer, D-Va., along with Sen. Chris Van Hollen, D-Mary., introduced a 10% surtax on wages and capital gains above $2 million. Sen. Ron Wyden, the ranking Democrat on the Senate Finance Committee, also is finalizing a mark-to-market plan that would tax investments every year instead of when they’re sold.
“We need to send a vision to people of what equity in taxation can actually look like,” Schakowsky said. “It’s really important to put them down in legislation and then we can discuss the differences and fight over them.”
Editor’s note: What do you think of the 59% tax hike bill for top earners? Is it too little, too much or just right — or totally insane? Share your thoughts below.