Democratic Sens. Chris Van Hollen of Maryland and Cory Booker of New Jersey have introduced separate tax proposals that would reduce or eliminate federal income taxes for many lower and middle income Americans while increasing taxes on higher earners.

Van Hollen’s bill, called the Working Americans’ Tax Cut Act, would create what his office describes as a “maximum tax” calculation tied to median living costs. Booker’s bill, called the Keep Your Pay Act, would increase the standard deduction and expand several family and worker tax credits.

Under Van Hollen’s proposal, income exemptions would be set at $46,000 for single filers and $92,000 for joint filers. His office said qualifying taxpayers would be those earning 175% or less of those amounts.

Van Hollen’s office said a single filer earning $50,000 would receive about $2,800 in tax relief, and a family of four earning $95,000 would save about $6,000.

Eligible taxpayers would calculate their tax liability under current law and under a 25.5% rate combined with the cost of living exemption, then pay whichever amount is lower. The exemption would phase out for those earning up to $80,500.

To pay for the plan, Van Hollen’s bill would impose surtaxes on higher income taxpayers. Single filers would face a 5% surtax on income above $1 million, a 10% surtax above $2 million, and a 12% surtax above $5 million. For joint filers, those thresholds would be $1.5 million, $3 million, and $7.5 million.

The Yale Budget Lab estimated the surtax would affect about 615,000 tax filers and raise $1.46 trillion over 10 years.

“Far too many Americans are working hard for their paychecks but still having trouble making ends meet,” Van Hollen said in announcing the bill. “These Americans who are earning just enough to get by to meet their basic living expenses should not have to pay a federal income tax.”

Booker’s proposal would raise the standard deduction to $37,500 for single filers, $75,000 for joint filers, and $56,250 for head of household filers.

The bill would also expand the Child Tax Credit to $4,320 for children under age 6 and $3,600 for children ages 6 through 17. Parents would receive an additional $2,400 in the year a child is born. The credit would be fully refundable.

The proposal would also expand the Earned Income Tax Credit for workers without qualifying children by increasing the phase in rate and income thresholds. It would also make workers ages 19 to 24 and those over 65 eligible for the credit.

To offset part of the cost, Booker would raise the top two individual income tax rates from 35% and 37% to 41% and 43%. He has also said he would support additional business tax increases, including a higher corporate income tax rate and a higher stock buyback excise tax, though he has not released details.

The Tax Foundation estimated Van Hollen’s proposal would reduce federal revenue by $86 billion from 2026 through 2035 on a static basis. It estimated Booker’s proposal would reduce federal revenue by up to $6.7 trillion over the same period. The group said those estimates do not include Booker’s unspecified business tax changes.

The Tax Foundation also estimated Van Hollen’s plan would reduce long run GDP by 0.1% and Booker’s plan would reduce long run output by 0.3%.

According to the Tax Foundation, Van Hollen’s proposal would increase taxes on average for the top 1% of filers and reduce taxes for other income groups. It estimated that 38% of filers would receive a tax cut and 0.4% would see a tax increase.

The group estimated Booker’s proposal would reduce taxes for about 82% of filers in 2027, while 2.8% would see a tax increase. It said middle income taxpayers would receive average tax cuts of $3,398, and bottom quintile taxpayers would receive average cuts of $1,257.

Rep. Don Beyer, a Virginia Democrat and co-sponsor of Van Hollen’s bill, said the measure would require higher income Americans to contribute more. “For decades, our tax code has been tilted to benefit the wealthiest Americans, especially those making millions of dollars each year from investments and capital gains,” Beyer said.

Sen. Martin Heinrich of New Mexico, another co-sponsor of Van Hollen’s bill, linked the proposal to household expenses. “The cost of everything is going up from groceries to gas to electric bills,” Heinrich said. “Working families in New Mexico deserve a break.”

Sen. Chris Coons of Delaware also backed the proposal and said it would provide relief from what he described as higher costs tied to tariffs and foreign policy.

Neither proposal is expected to advance in the current Congress, where Republicans hold majorities in both chambers. Neither senator has announced a timetable for floor action.

Source: Democratic Presidential Contenders Have a New Idea: Tax Cuts | The American Prospect