A MARTÍNEZ, HOST:
There's a growing push among those on the left to raise taxes on the wealthy and cut taxes on lower earners. One Democrat on Capitol Hill wants to tackle both in one bill. Our colleagues at the Indicator from Planet Money, Darian Woods and Adrian Ma, dig into the math.
DARIAN WOODS, BYLINE: Senator Chris Van Hollen's big idea is more progressive income tax.
CHRIS VAN HOLLEN: It is really stacked toward the very wealthy and people who make money off of money and stacked against people who are making a paycheck day by day.
ADRIAN MA, BYLINE: What the senator's bill does is make earnings below $46,000 tax free at the federal level. You'll still have to pay Medicare and Social Security, but no federal income tax. Then you slowly lose this tax-free amount once your income hits around $80,000.
VAN HOLLEN: This is deficit neutral, meaning the money we raise from the surtax on millionaires is enough to cover the costs of providing tax relief to working Americans.
WOODS: That's largely true, according to Garrett Watson, director of policy analysis at the Tax Foundation.
GARRETT WATSON: We find a very small net revenue loss, but fairly close.
WOODS: For a single filer, it's an extra 5% on income above $1 million, 10% on income above 2 million and 12% on income above $5 million. So what really concerns Garrett is what that tax on wealthy earners is used for. In the United States, the federal government is going deeper and deeper into debt, even in the boom times. Garrett sees what he calls an entitlement crisis coming in the future. The main Social Security Trust Fund is projected to run out of money within about a decade.
WATSON: And, you know, raising revenue to cut more Americans' taxes yet again is going to make that political and policy challenge even harder.
MA: We raised Garrett's concerns with Senator Chris Van Hollen.
WOODS: Given these trends and potential future crises that America may face, could you imagine putting all of that money somewhere else?
VAN HOLLEN: My view is that it's important to say to people who are working paycheck to paycheck who are meeting the definition of a livable wage that you should be able to live off of that.
WOODS: But is there a risk of, with all the other proposed taxes, that you do kill the golden goose, in the sense that, you know, this is 12% for those very high earners on top of the 37% taxes they pay?
VAN HOLLEN: You know, I would remind everybody that when JFK, President Kennedy, was in the White House, the marginal tax rates were 90%. And the big Kennedy tax cut took them down to about 70% marginal tax rates. Under this plan, if you're in the top, top tier, over $7 million for a couple, you'll be around a 50% marginal tax rate.
MA: What the Senator seems to be tapping into is a sense by Americans that they're paying too much in taxes. Now about half of Americans don't think the tax they're paying is fair.
WOODS: Chris Van Hollen believes he's found a way to ease some of those frustrations by getting the people at the very top of the economic pyramid to pay for people lower down. It's a plain fact that there are more voters there than at the peak.
MA: Adrian Ma.
WOODS: Darian Woods, NPR News. Transcript provided by NPR, Copyright NPR.
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