Democratic presidential hopeful Sen. Michael Bennet wants to increase the top income-tax rate paid by the wealthiest Americans to 44%.
That rate exceeds those articulated by other potential candidates to date, according to experts.
Bennet, who has represented Colorado in the Senate since 2009, recently proposed a slew of tax reforms to pay for his “Real Deal” agenda, which calls for an expansion of the child and earned-income tax credits, a $15 minimum wage, paid family and medical leave and a universal retirement savings account, among other things.
The senator projects his tax-raising reforms — such as a higher top income-tax rate, as well as changes to capital gains taxes, estate taxes and a new tax deduction for businesses structured as pass-through entities — will cover $5.2 trillion of the agenda’s overall $6 trillion cost over a decade.
The presidential contender proposed creating a new marginal income-tax bracket of 44%, which a campaign adviser said would apply to millionaires, but didn’t suggest a specific income threshold.
“Of all the things he’s suggested, that is not something the other candidates have proposed,” said Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center.
Sen. Bernie Sanders, I-Vt., among the more liberal Democrat candidates in the contest, said he would “substantially increase” the top marginal rate for those with annual income exceeding $10 million, but didn’t offer specifics.
Other Democrats in the field haven’t proposed a top rate above 39.6%, Holtzblatt said. That was the previous top tax rate paid by the wealthiest Americans before the Tax Cuts and Jobs Act reduced it to 37%.
Bennet currently ranks last among the remaining Democrats running for president, according to a RealClearPolitics average of national polling data.
Bennet’s agenda, issued Jan. 2, contains several other tax items that resemble ideas from other Democratic candidates.
“There are definitely some similarities, especially with who we think of as the primary candidates: [Elizabeth] Warren, Sanders and [Joe] Biden,” said Erica York, an economist at the Tax Foundation.
For one, Bennet would eliminate the so-called pass-through deduction created by the Tax Cuts and Jobs Act. Most of the benefits of this TCJA provision, which offers a 20% tax deduction on business income of pass-through businesses like limited liability companies, have gone to wealthy business owners.
Bennet would also change how the wealthy pay tax on profits they make from the sale of investments such as stocks and mutual funds. Under current law, 20% is highest tax rate Americans pay on this income, and they only pay it when selling an investment.
The senator’s proposal would allow wealthy investors to choose between an annual tax on investment holdings at their ordinary income-tax rates, or a tax at the time of sale at ordinary income-tax rates plus a certain level of interest.
Bennet also added a second, higher estate tax rate for estates of more than $1 billion, according to a campaign adviser. The current 40% federal estate tax currently applies to individuals with estates valued more than $11.58 million.