House Democrats are treading carefully when it comes to talk of a 70 percent marginal tax rate on income above $10 million, an idea floated by freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezOcasio-Cortez sparks debate with talk of 70 percent marginal rate Nordic lessons on AOC’s 70 percent tax proposal Virginia Democrat adds his support to Green New Deal MORE (D-N.Y.) in a recent “60 Minutes” interview.
Many Democrats are supportive of the freshman phenom’s call for higher taxes on the rich, but even some progressives are stopping short of endorsing that high a marginal rate.
Rep. Pramila JayapalPramila JayapalOcasio-Cortez sparks debate with talk of 70 percent marginal rate Ten Dem lawmakers added to House Ways and Means Committee Jayapal introduces bill to repeal pay-go MORE (D-Wash.), a co-chairwoman of the Congressional Progressive Caucus, said she thinks “the fact that people are not paying their fair share is a problem and the millionaires and billionaires are the ones where that has to rest.”
Rep. Raúl Grijalva (D-Ariz.), a leader of the progressive caucus in the last Congress, said that while it’s important to make sure that “everybody’s carrying their load,” he didn’t know if 70 percent “would be the right number or not.”
House Budget Committee Chairman John YarmuthJohn Allen YarmuthOcasio-Cortez sparks debate with talk of 70 percent marginal rate Dems look to chip away at Trump tax reform law Overnight Health Care: Dem chair seeks CBO report on single-payer | Democrats demand answers on Trump short-term insurance plans | Drugmaker Eli Lilly to publish drug list prices MORE (D-Ky.) said he wasn’t sure about a specific top rate but said that Ocasio-Cortez is “not off-base.”
Other Democratic lawmakers were more critical.
“I thought it was comical,” said Rep. Bill PascrellWilliam (Bill) James PascrellOcasio-Cortez sparks debate with talk of 70 percent marginal rate House Dems offer bill to require presidents to release tax returns Dems look to chip away at Trump tax reform law MORE (D-N.J.), a member of the tax-writing Ways and Means panel.
“You can have reasonable taxation, and then you can send signals that we’re just going to go after people who have a few dollars,” he said.
Rep. Ro KhannaRohit (Ro) KhannaOcasio-Cortez sparks debate with talk of 70 percent marginal rate Rethinking America’s commitment to Afghanistan Progressives tried to block this important taxpayer protection MORE (D-Calif.), who is first vice chairman of the Congressional Progressive Caucus, said he would take a different approach to raising revenue, such as repealing past tax cuts on high earners, taxing corporations on foreign earnings that currently aren’t being taxed, creating a financial transactions tax and reducing U.S. military involvement overseas.
“My view is one that there are better ways of getting to the revenue” than a 70-percent tax on high incomes, he said.
Ocasio-Cortez floated the idea as a way to help pay for a “Green New Deal,” a proposal aimed at taking action on climate change.
More broadly, the new lawmaker has argued that a progressive tax system with higher taxes on the wealthy is well worth considering as the country looks for ways to pay for initiatives on health care and other safety-net issues.
She also made the argument that such high rates are hardly unprecedented.
“You look at our tax rates back in the ’60s and when you have a progressive tax rate system your tax rate, you know, let’s say, from zero to $75,000 maybe 10 percent or 15 percent, et cetera. But once you get to, like, the tippy-tops — on your 10 millionth dollar — sometimes you see tax rates as high as 60 or 70 percent,” Ocasio-Cortez said.
She noted that a high marginal rate wouldn’t hit most Americans, and that it would also only pinch a portion of a wealthy person’s income. A 70 percent marginal rate on income of $10 million would be effective only on a person’s income above $10 million.
“That doesn’t mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder you should be contributing more,” she said in the “60 Minutes” interview.
Ocasio-Cortez spokesman Corbin Trent told The Hill that the congresswoman’s remarks on the show were “more conceptual” than a specific proposal for a 70 percent marginal rate.
The top marginal tax rate in the United States was above 90 percent in much of the 1950s and early 1960s, and the rate was 70 percent as recently as 1980.That year, the 70-percent rate applied to income over $215,400 for married couples.
During Ronald Reagan’s presidency, the top rate was first cut to 50 percent and then lowered again to 28 percent.
In the last 25 years, the top rate has been in the mid-to-high 30s, with President TrumpDonald John TrumpJulián Castro hits Trump in campaign launch: ‘A crisis of leadership’ Center stage once again: Colin Powell’s UN speech in ‘Vice’ Julián Castro announces 2020 White House bid, swipes at Trump MORE’s tax law lowering the top rate from 39.6 percent to 37 percent. In 2019, the 37-percent rate applies to income over $612,350 for a married couple filing jointly.
Ocasio-Cortez’s call for a 70 percent marginal tax rate does have the support of another freshman progressive lawmaker: Rep. Ayanna PressleyAyanna PressleyOcasio-Cortez sparks debate with talk of 70 percent marginal rate Progressive group backed by Ocasio-Cortez sets sights on first Dem target in 2020 116th Congress breaks records for women, minority lawmakers MORE (D-Mass.), who said she could potentially see herself introducing or sponsoring legislation down the line.
“I think we have a decisive mandate from this electorate, this 116th Congressional class to be bold. I think every creative solution needs to be on the table,” Pressley told The Hill. “And from a values based perspective to tax those, you know, who earn $10 million a year, I think it’s exactly what we should be doing.”
Pressley said while she and most members are currently focused on the partial government shutdown, she looks forward to continuing having a dialogue with like-minded members as they consider crafting policy.
Freshman Rep. Ilhan OmarIlhan OmarOcasio-Cortez sparks debate with talk of 70 percent marginal rate 116th Congress breaks records for women, minority lawmakers Muslim, black congresswomen pose for photo together: ‘Representation matters’ MORE (D-Minn.), when asked about a top rate, noted that there had been a rate of 90 percent in the past and thinks that lawmakers should be “as bold as we can so that we can implement the courageous policies that are going to usher in prosperity for all Americans.”
Rep. Jan SchakowskyJanice (Jan) Danoff SchakowskyOcasio-Cortez sparks debate with talk of 70 percent marginal rate The 116th Congress can improve Medicare and Social Security ‘Medicare for all’ advocates emboldened by ObamaCare lawsuit MORE (D-Ill.), who offered a bill in 2017 that would have created a 49 percent rate for income over $1 billion, said that she hasn’t proposed rates as high as 70 percent in the past but “would not reject that out of hand.”
Some Ways and Means Committee Democrats said that the focus should be on holding hearings looking at the tax code following the enactment of Trump’s tax law, rather than pursuing Ocasio-Cortez’s idea.
“I think what makes sense is for the committee to step back and start holding hearings on what’s out there right now, seeing what the impact is, whether that meets our needs and obligations as a country, and maybe not just pursue policy because a newly minted freshman thinks it’s a good idea, who isn’t on the committee,” said Rep. Ron KindRonald (Ron) James KindOcasio-Cortez sparks debate with talk of 70 percent marginal rate The 15 Democrats who voted against Pelosi Live coverage: House elects new Speaker as Dems take charge MORE (D-Wis.), who is also a member of the moderate New Democrat Coalition.
Rep. Lloyd DoggettLloyd Alton DoggettOcasio-Cortez sparks debate with talk of 70 percent marginal rate Former interpreter for US troops in Afghanistan detained by CBP, threatened with deportation Shutdown chaos complicates IRS tax season MORE (D-Texas), a Ways and Means member who belongs to the progressive caucus, also said that lawmakers should focus on reviewing Trump’s tax law.
“I think we’re better focused on that than a rate that many people will view as a little over the top,” Doggett added.