On The New York Times’ Upshot blog, Neil Irwin explains that Democrats’ tax plans wouldn’t affect just the uber-wealthy, but also many of the high-income professionals who populate the very states Democrats represent. He writes:
Much of the Democratic primary race has focused on taxes aimed at the billionaire class — policies devised to reduce inequality and fund progressive goals on health care and education.
But there’s also a less discussed tax increase in leading Democratic policy proposals that would affect not just a tiny sliver of the ultra-wealthy, but also millions of high-income workers. For these people, many of them affluent professionals in Democratic strongholds, it would be the biggest tax increase in recent memory.
This year, American workers and their employers owe a combined 12.4 percent on Social Security payroll taxes for income up to $132,900 (rising to $137,700 in 2020). They owe nothing on earnings above that level.
Some Democrats in the thick of the presidential race and on Capitol Hill now seek to change or eliminate that cap — potentially placing a new double-digit tax on high earners, with several plans focusing on earnings above $250,000.
This would pump vastly more money into Social Security, enabling more generous benefits and helping sustain the finances of a program that could be forced to slash benefits in the decades ahead if nothing is done.
The result would be a large tax increase on high earners, even before other changes a Democratic administration might contemplate, such as increasing income tax rates or taxes on investment income.
Read more here.
