House Democrats unveiled a plan on Monday to provide deeper tax breaks to the middle class and impose a new levy on Wall Street, as the party begins to focus its economic pitch for the next election cycle.
Rep. Chris Van Hollen (D-Md.), ranking member on the House Budget Committee, said Monday the plan would rebalance the tax code toward middle-class earners and away from wealthier Americans, who he said get the lion’s share of benefit from the tax code.
Van Hollen’s plan has next-to-no chance of passing into law, given Republican control of Congress, but it will at least serve as a template for Democratic aspirations and as an opening offer in the budget battles for the next two years.
{mosads}Van Hollen said the “action plan” is aimed at tackling decades-old problems of stagnant wages and income inequality, and provides for “more broadly shared prosperity with a majority of workers rewarded with a fair share of growing economic pie.”
“We want to grow the paychecks of all, not just a few well-connected elites,” he added Monday at the Center for American Progress.
Those issues have received a lot of rhetorical attention from Democrats, and were a key part to President Obama’s re-election campaign in 2012, helped along by GOP nominee Mitt Romney’s comments about the “47 percent” who don’t pay income tax.
But a similar push failed to gain traction in the 2014 midterm elections, despite Democrats talking repeatedly about issues like raising the minimum wage.
Van Hollen said Monday that his proposal would provide bigger paychecks for most workers — an estimated 150 million people — and provide tax breaks for those who save more.
He also asserted that the tax deck was stacked against people “who make money off of hard work.”
Republicans, Van Hollen said, want to keep it that way, and have churned out budget proposals aimed at helping wealthy Americans while slashing much-needed tax breaks for the middle class.
The GOP’s trickle-down theory of providing tax cuts for wealthy Americans to boost economic growth and spur job creation has already “crashed miserably in the real world,” Van Hollen said.”
The crux of the Democratic plan would provide a “paycheck bonus tax credit of $1,000 a year for every worker who makes $100,000 or less or $2,000 a year for a couple who make less than $200,000,” Van Hollen said.
Wall Street and the nation’s top 1 percent of earners would finance the estimated $1.2 trillion proposal over the next 10 years through a new fee on financial transactions.
Van Hollen said that new levy is fair given the benefits that high earners accrue in the form of tax breaks on corporate jets and on lavish executive bonuses. Even so, even senior Obama administration officials have previously been cool to the idea of a transactions tax.
In the next 10 days, Van Hollen said he would introduce the CEO Employee Fairness Act aimed at spurring pay raises for workers.
The legislation would prohibit any tax breaks on executive bonuses in excess of $1 million in the absence of pay increases for workers based on their productivity and cost of living adjustments.
Between 2007 and 2010, top executives got $66 billion in tax breaks. Meanwhile, CEO pay has ballooned and is now 300 times that of the average worker.
“No raise for workers, no tax breaks for executive bonuses,” Van Hollen said, summing up the rationale for his proposal.
Other provisions include almost tripling the current tax credit for child care and rewarding people who save at least $500 a year.
The proposed tax credit for child care would jump to $8,000 from $3,000 while workers who put at least $500 a year into savings can save $250 on their taxes.
Van Hollen suggested that taxpayers could receive the bonus by funneling their tax refunds into their savings or retirements accounts on their return.
The proposals met with immediate – and expected – opposition from Republicans, who have for years knocked Democrats for what they see as a tired reliance on tax hikes on the wealthy.
“Just as the sun rises in the east, Washington Democrats propose another massive tax increase,” said Brendan Buck, a spokesman for House Ways and Means Chairman Paul Ryan (R-Wis.).
“Here in the House our focus is going to be on cleaning up the tax code so that we can lower rates for all taxpayers and help create good-paying jobs, not scaring them off with punitive tax hikes,” Buck said.