10% Additional Levy on Family Incomes Over $2 Million Would Raise $635 Billion
Among many progressive tax reform plans popping up these days on Capitol Hill and along the presidential campaign trail, one relatively modest proposal—a Millionaires Surtax—would provide a good first step toward closing the gap between the wealthy and everyone else by raising substantial revenue to make new investments that protect working families. The surtax could do this without creating new types of taxes or significantly reworking the current tax system.
The Millionaires Surtax, which is being introduced in Congress today, would raise $635 billion over 10 years by adding 10 percentage points to the top tax rates paid by married couples on their annual income over $2 million (over $1 million for individuals). The bills’ lead sponsors are Senators Chris Van Hollen (D-MD) and Sherrod Brown (D-OH), a member of the Senate Finance Committee, and Rep. Don Beyer (D-VA), a member of the House Ways and Means Committee. A diverse array of more than 70 national organizations have endorsed the legislation.
We urge you to write an editorial or opinion piece supporting the Millionaires Surtax as a practical first step that would raise substantial revenue and have a better chance of being enacted sooner than more complex reforms, which will take more time to garner support.
The Millionaires Surtax is good policy because it:
- Raises substantial revenue for critical needs from the richest 0.2%. The non-partisan Tax Policy Center estimates the surtax would raise $635 billion over 10 years, even though it would be paid by only the nation’s richest 0.2% of taxpayers, or just 329,000 people in 2020. The surtax does not raise taxes for 99.8% of taxpayers. That $635 billion could be used to protect and strengthen Social Security, Medicare and Medicaid, and make important new investments in healthcare, infrastructure, education, housing and more.
- Applies to all forms of income over $2 million, both from work and wealth. The 10-percentage point Millionaires Surtax would apply to all income of the wealthy above $2 million for married couples or $1 million for individuals: salaries, wages and private business profits currently taxed at a 37% rate; and returns on all investments, such as long-term capital gains and dividends, currently taxed at 20%. This universal application is key to successfully taxing the rich, who derive most of their income from wealth rather than from work. For more details on how the surtax works go here, or to surtax.org.
- Helps close the wealth gap. The Millionaires Surtax would begin to address the nation’s widening wealth and income gaps that destabilize our economy and threaten our democracy. The United States is one of the most economically unequal nations in the developed world, with income and wealth gaps not seen here in almost 100 years. The richest 0.1% now own more than the bottom 80%, and the richest 1% own more than the bottom 90%.
- Is easy to understand and simple to apply, and it does not contain loopholes for the wealthy to exploit. The surtax simply adds 10 percentage points onto existing tax rates affecting income above $2 million for married couples and $1 million for individuals. Taxpayers won’t be able to game the system since the surtax applies equally to all forms of income above those levels.
- Recovers a big part of revenue lost from the Trump-GOP tax cuts. The Millionaires Surtax would raise about one-third of the $1.9 trillion ten-year cost of the Trump-GOP tax cuts passed in 2017. (Note: the Congressional Budget Offices’ original $1.5 trillion cost figure has been updated to $1.9 trillion.)
- Enjoys broad public support. According to a recent poll by Hart Research Associates, almost three in four likely 2020 voters (73%) support a Millionaires Surtax. Just 27% object to the measure. The Millionaires Surtax has great appeal to key swing groups like independents (76% support) and moderates (76% support). Even a majority of Trump voters (57%) and Republicans (53%) favor the policy, despite its being identified explicitly as a Democratic
- May boost the economy. Contrary to conservative claims, leading economists have found no evidence that raising taxes on the rich hurts the economy, and some argue it may actually help it. Upper income tax rates have been trending down for 70 years, and so has economic growth. Tax hikes on the rich during the Clinton and Obama presidencies led to more job growth than the tax cuts for the wealthy of the George W. Bush years.
Leonard Burman of the Tax Policy Center has stated in congressional testimony: “There is no obvious relationship between capital gains taxes and economic growth.” Looking at over 60 years of data, he noted that growth rates were often higher when capital-gains rates were also higher, and growth sometimes lagged when capital-gains rates were cut.
The reason may be that wealthy people already have plenty of cash and not enough places to invest it, so giving them more money through tax cuts doesn’t create economic growth. But increasing taxes on the rich and using the resulting revenue for infrastructure, education, research and other public investments can make the economy more productive and efficient, spurring investment, boosting employment and raising incomes.
The Millionaires Surtax would simply and effectively move us closer to a Fair Share Tax System, an essential component of an economy that works for all of us, not just the wealthy few. For more information see surtax.org
“Right now, everyday Americans are shouldering our nation’s tax burdens, while many of the very richest skate by without paying their fair share. This is fundamentally backwards – and creates a growing opportunity gap that is harder and harder for American families to overcome. It’s time to right this wrong. The Millionaires Surtax is one step we can take to invest in policies that bring prosperity and opportunity to all Americans,” said Senator Van Hollen.
“The Millionaires Surtax is a sensible plan to restore fairness to the tax code, fight rising inequality, and fund important priorities for the American people,” said Congressman Beyer. “The Republican tax cuts, as we feared, led to enormous benefits for the wealthy. Our legislation would require the wealthiest to pay their fair share and help prevent tax avoidance, which has been an enormous problem in enforcing our tax code. It would also benefit working people by providing revenue to help offset the cost of key legislative initiatives, for instance infrastructure investments. This is an idea whose time has come.”
“There’s no reason why the richest people in the country should be paying less in taxes than the workers that they employ. Period,” said Senator Brown. “Corporate greed is fundamental to the Wall Street business model and until we change that, the richest people in the country are going to continue exploiting loopholes so they don’t have to pay their fair share.”
“The Millionaires Surtax is a simple to implement, easy to enforce, laser-targeted plan to tax the extremely wealthy,” said Morris Pearl, chair of Patriotic Millionaires. “This surtax exclusively applies to individuals making over $2 million per year, which is just the very top of the 1 percent in this country. Americans want to tax the rich, and this surtax explains precisely who will be getting taxed in the name itself. This is an easy plan to tax the rich and an even easier sell to the American public, so let’s get it done.”
“The Millionaires Surtax would simply and effectively move us closer to a Fair Share Tax System,” said Frank Clemente, executive director of Americans for Tax Fairness, a coalition of hundreds of endorsing organizations that is leading the push for a Millionaires Surtax. “It’s an essential component of an economy that works for all of us, not just the wealthy few.