The budget released last week by House Budget Committee Chairman Paul Ryan (R-WI) included a cut in the top income tax rate of ten percentage points, taking that rate — which is paid by just the richest two percent of Americans — from 35 to 25. Ryan claims that his tax code will raise the same amount of revenue as the current code, which, as Michael Linden notes, means that he’s necessarily planning a middle class tax increase.
House Budget Committee Ranking Member Chris Van Hollen (D-MD) delivered a speech at the Center for American Progress Action Fund today to lay out the principles that House Democrats envision for their 2012 budget plan. At the very least, Van Hollen explained, the Democrats’ budget will “raise the top income tax rate back to where it stood in the 1990s and close loopholes in the tax code in order to raise revenue levels.”
Several Democrats in the House — including Rep. Jan Schakowky (D-IL) and the Congressional Progressive Caucus — have endorsed additional tax brackets at the top of the income scale as a way to reduce the deficit, rather than resorting to draconian budget cuts. During an interview with ThinkProgress, Van Hollen said — while going to great lengths to emphasize that the Democratic leadership has not made a decision one way or the other — that additional tax brackets are “something that should be looked at”:
Speaking personally only and not as the ranking member of the Budget Committee or as a member of the Democratic leadership, just speaking for myself, I think that’s something that should be looked at as part of individual tax reform. I think that we do need to look at some of the ideas in the bipartisan fiscal commission’s approach, and I do think you can change some rates and broaden the base, but I think we should go into it with an open mind as to what the parameters are.
At the moment, the wealthiest one percent of Americans make nearly 25 percent of the country’s total income, and income inequality is the worst its been since the 1920s. The top 400 taxpayers — who have more wealth than the bottom 50 percent of Americans combined — are paying lower taxes than they have in a generation. In 2009, tax revenue was the lowest its been in 60 years.