AOC plans bill to boost top individual tax rate to 59%
Democratic Representatives Alexandria Ocasio-Cortez and Jan Schakowsky are working on legislation that would nearly double the top individual U.S. tax rate to 59 percent on the highest incomes.
The bill, which is still being drafted, also would increase capital gains rates to equalize them with income taxes and move to a so-called mark-to-market system. That would require individuals to pay taxes annually on the appreciation of their investments, real estate and business holdings.
The bill corrects “the most glaring injustice” of the tax code: That investors pay lower taxes than nurses and electricians, Schakowsky, an Illinois Democrat, said Friday.
The legislation, which is slated to be introduced in January, would mark a significant tax increase, particularly for high-income earners and those who earn their money from investments. The current top rate is 37 percent and the long-term capital gains rate is 23.8 percent, including a levy to fund the Affordable Care Act.
Ocasio-Cortez of New York in January called for a significant increase in the top individual rate, suggesting that those making $10 million or more should pay a 70 percent tax rate. The 59 percent income-tax rate, combined with federal payroll levies and state and local taxes, means that top earners would be paying around 70 percent, Schakowsky said at an Urban-Brookings Tax Policy Center event in Washington.
The plan would raise about $2 trillion over a decade “or maybe even more,” she said.
The legislation adds to the trove of tax ideas that Democrats are preparing if they should sweep the House, Senate and White House in the 2020 elections. They are considering large tax increases that could fund expanded social services, including health care, renewable energy investments and education.
Earlier this month, Representative Don Beyer of Virginia, along with Senator Chris Van Hollen of Maryland, introduced a 10 percent surtax on wages and capital gains income topping $2 million. Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, is also finalizing a mark-to-market plan — also in the Ocasio-Cortez and Schakowsky bill — that would tax investments annually, rather than 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.”