Democrats plan to raise $1 trillion over 10 years by making the federal income tax code more progressive. But they won’t get the money quickly — actually their plan. goes down Total income tax revenue in 2023. And when the money comes, it will come from the very rich.
why it matters: bipartisan estimates joint committee on taxation Show on Tuesday House Democrats’ plan to raise $12 billion less than the current tax regime in 2023. But it will raise $133 billion more in 2029.
how it works: Taxes on the very wealthy would increase immediately, with taxpayers earning more than $1 million collectively paying more than $1 trillion in taxes, a 10.6% increase from $908 billion under current law.
- Americans earning less than $40,000 per year would pay only $7.2 billion in federal income tax, which is 90% less than the $72.3 billion under current law.
- The top personal federal income tax rate would be 37% to 39.6%. Democrats also want to see an additional 3% tax on Americans who make more than $5 million a year.
big picture: The income tax change is a central part of the kind in which Democrats are trying to raise money to pay for President Biden’s $3.5 trillion spending plan. They want to increase the top capital gains tax rate from 20% to 25%.