Under the Democrats’ new proposal, individuals making $100,000 a year or less at a job would benefit from the tax cuts. Wall Street firms and folks making over $453,000 annually will be taking a loss. The plan comes from Democratic Representative Chris Van Hollen, and he hopes that it will increase wages and drive down the nation’s income inequality problem.
After a blow-out in the mid-term elections, Democrats are getting serious, creating headline-grabbing proposals to the country’s problems. Van Hollen saw the writing on the wall before the party lost its majority in the Senate. According to the Washington Post, he began crafting the tax cut legislation before November, realizing that the Democratic agenda was too weak to appeal to voters.
The centerpiece of the tax cut proposal is a $1,000 credit for working individuals making less than $100,000 annually.
According to CNN Money, an additional $250 bonus would be included for people who save $500 of the tax credit.
Van Hollen would also increase credits for child or dependent care to $4,000. Likewise, two-earner couples who have children will get a 20 percent tax break for up to $60,000 worth of their income.
The total price tag for the tax cut proposal? $1.2 trillion over the next ten years.
Van Hollen wants to pay for the plan by cutting or modifying tax credits for wealthy individuals, and placing a new fee on stock market transactions.
The representative was not specific about what tax loopholes he would cut for wealthy individuals.
However, his proposal would bar companies from deducting CEO income of over $1 million unless that company also increased pay for workers.
He also proposed a 0.1 percent fee for stock trades. The pain from that idea would mostly be felt by high-frequency and high-volume traders, and although the percentage is low, it would theoretically garner enormous sums for the government. Van Hollen’s office estimates that the fee would increase revenues by $500 billion to $800 billion over the next ten years.
Unfortunately for Van Hollen, his proposal has virtually no chance of making it through the House or the Senate. According to the National Journal, Congressional Republicans are already rallying against the proposal, like GOP spokesman Brendan Buck.
“Just as the sun rises in the east, Washington Democrats propose another massive tax increase. 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.”
Republicans have been quick to label the proposal as a tax hike because of the unspecified increases for wealthy Americans and the Wall Street fees.
Chairman of the House Budget Committee Tom Price said the following in a statement.
“Washington shouldn’t be in the business of picking winners and losers in the economy.”
Van Hollen defended his ideas, saying that we needed a tax plan that works for everyone.
“What our country needs is a growing economy that works for all Americans, not just the wealthy few. Surely we can change the tax code to incentivize corporations to give employees bigger paychecks and reward people who earn money through hard work.”
Still, Hollen is likely aware that his legislation is doomed to the wastebasket in the current political climate. The representative is probably looking to 2016, in the hopes that his tax cut proposal can galvanize Democratic voters and finally get them excited about their party again.
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