Democrats float tax ‘action plan’ to slap Wall Street, give payouts to workers

The top Democrat on the House Budget Committee unveiled Monday the party’s plan to overhaul the tax code by raising taxes on Wall Street and big business and redistributing wealth to working-class American families, saying it would fix a broken system that favors the rich.

“The tax code is now skewed in favor of people who make money off of money and against those who make money off of work,” said Rep. Chris Van Hollen, ranking member of the committee, said in a speech at the Center for American Progress, a liberal think tank in Washington.

“Surely we can change the tax code to incentivize corporations to give employees bigger paychecks and reward people who earn money through hard work,” said the Maryland Democrat.

Mr. Van Hollen proposed several tax changes that would either put money in the pockets of working-class Americans by rewarding them with tax credits or punishing employers with extra taxes for not doling out raise to employees.

The plan built upon the liberal populism that dominates the Democrats agenda for confronting a Republican-controlled Congress, such as a push to raise the minimum wage and reduce student loan debt.

The proposal, which he called an “action plan,” included:

• A $1,000 “Paycheck Bonus Tax Credit” for every worker making less than $100,000 a year or a $2,000 credit for every couple filing joint returns who earn less than $200,000 a year;

• A “Saver’s Bonus” of $250 for each year for individuals who put at least $500 of their Paycheck Bonus Tax Credit or Earned Income Tax Credit into a tax-preferred savings account;

• The “CEO-Employee Paycheck Fairness Act,” which bars big corporations from claiming tax deductions for CEO and other corporate compensation over $1 million unless their workers are getting paycheck increases that reflect increases in worker productivity and the cost of living;

• Updating the “Child and Dependent Care Tax Credit” by raising the amount of eligible expenses, indexing the caps for inflation, and making the credit refundable;

• A “Second-Earner Tax Deduction” that would increase the take-home pay of two-earner families with a 20 percent tax deduction for second earners with dependents on up to $60,000 of their income.

“We can pay for these new tax benefits for working Americans by changing the ways our current tax code is rigged in favor of those who make money off of money, and against those who make money from work,” Mr. Van Hollen said.

He said the cost would be covered with two measures: curbing tax breaks for the financial services industry and imposing a new, small fee on Wall Street transactions.

“This is a plan to grow the paychecks of all, not just the wealth of a few,” he said. “This proposal attacks the chronic problem of stagnant middle-class incomes from both directions — it promotes bigger paychecks and lets workers keep more of what they earn.”

House Budget Committee Chairman Tom Price, Georgia Republican, said that repairing the tax code shouldn’t be about redistributing wealth.

“We welcome our Democrat colleagues to the conversation about how we can fix our broken tax code and improve the financial security of American families. But Washington shouldn’t be in the business of picking winners and losers in the economy,” he said. “We should focus on fundamental tax reform that builds a foundation for job creation and economic growth.”