Kelly, Van Hollen, Gillibrand, Booker, Kim, Beyer Introduce New Bill to Cut Taxes for Millions of Working Americans
Bill eliminates federal income taxes for Americans making under $46,000; is fully paid for by ensuring Americans making over a million dollars pay their fair share
Today, U.S. Senators Mark Kelly (D-AZ), Chris Van Hollen (D-MD), Kirsten Gillibrand (D-NY), Cory Booker (D-NJ), and Andy Kim (D-NJ) and U.S. Representative Don Beyer (D-VA-08) introduced the Working Americans’ Tax Cut Act, new legislation to provide much-needed tax relief for millions of working Americans who are struggling to afford the cost of living as wages stay the same and prices keep going up.
This bill provides broad, permanent tax cuts to nearly 130 million working Americans. It eliminates federal income taxes for Americans who make under the median cost of living, about $46,000, and provides a significant tax break to individuals making between $46,000 to $80,500 with proportionally higher rates for heads of households and married couples.
The legislation is fully paid for and avoids raising the national debt by having the wealthiest pay their fair share through a surtax on income above a million dollars. This proposal stands in stark contrast to the tax law that Donald Trump and Republicans in Congress passed last year—which provided the biggest tax giveaways to billionaires and exploded the deficit, while offering only temporary relief for some working families.
Senators Kelly and Van Hollen and Representative Byer unveiled the legislation at a press conference on Capitol Hill today. Watch and download Kelly’s remarks here.
Sen. Kelly speaks on Capitol Hill.
“Families across Arizona are working hard and doing everything right but still falling behind. Instead of helping them get ahead, Trump gave more huge tax breaks to the wealthiest Americans while hiking up prices on everyone else,” said Senator Kelly. “Our plan is to put more money in the pockets of middle-class Americans —from nurses and teachers to firefighters and electricians —and restore the basic promise that in this country, hard work pays off.”
“Far too many Americans are working hard for their paychecks but still having trouble making ends meet. These Americans who are earning just enough to get by – to meet their basic living expense – should not have to pay a federal income tax. Our bill would ensure just that – and it would provide a significant tax break to millions of other working Americans, so folks can keep more of their hard-earned money in their pockets,” said Senator Van Hollen.
“Families are struggling amidst higher costs in Trump’s America,” said Senator Gillibrand. “I’m proud to cosponsor the Working Americans’ Tax Cut Act to support working families, drive economic growth, and reduce income inequality. While the Trump administration turns its back on hardworking Americans, I will keep fighting to lower costs and make sure Americans can take home more of their hard-earned pay.”
“It’s unacceptable that while so many are struggling to afford everyday expenses in our country, those at the top still aren’t paying their fair share. While Trump continues to protect a system that only works for his billionaire buddies, this tax proposal delivers real relief to working Americans – and it can’t come soon enough,” said Senator Kim.
“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. Our bill would restore balance and fairness to our tax code by asking the wealthiest Americans to contribute more through a tiered surtax on income above one million dollars. That revenue will deliver meaningful tax relief for working Americans trying to afford basic necessities like groceries, rent, child care, and gas,” said Representative Beyer.
In addition to Senators Kelly, Van Hollen, Gillibrand, Booker, and Kim, this legislation is cosponsored in the Senate by Senators Dick Durbin (D-IL), Bernie Sanders (I-VT), Jeff Merkley (D-OR), Chris Coons (D-DE), Richard Blumenthal (D-CT), Brian Schatz (D-HI), Tammy Baldwin (D-WI), Mazie Hirono (D-HI), Martin Heinrich (D-NM), Angus King (I-ME), Ed Markey (D-MA), Peter Welch (D-VT), Adam Schiff (D-CA), and Lisa Blunt Rochester (D-DE).
Background:
The Working Americans’ Tax Cut Act provides needed tax relief for working Americans – whether they are a single adult, a head of household, or a married couple filing jointly – by reducing their federal income taxes based on their income to help ensure they can afford their cost of living expenses.
- The median cost of living for a single adult with no children in the United States is estimated to be $46,000 a year, based on county-level data aggregated by the Living Wage Institute. Individuals who earn less than that will not pay federal income taxes.
- For individuals with income ranging from $46,000 to $80,500, the legislation provides a significant tax break to also combat cost of living expenses. It phases out this cost-of-living exemption at 175% of the median cost of living for a single adult with no children. As a result, a person making between $46,000 and $80,500 a year would have a lower tax rate using this exemption than they do under the current tax system. To illustrate, a single person who makes $50,000 would typically receive a tax cut of approximately $2,800.
- The bill includes a larger exemption for heads of households, 140% of the single exemption or $64,400; and for married couples filing jointly, 200% of the single exemption or $92,000.
- These exemptions will also phase out at higher rates, with heads of households making between $64,400 and $112,700 a year and married couples making between $92,000 and $161,000 a year receiving a tax cut under this legislation. For example, a family of four who earns $95,000 would typically receive a tax cut of approximately $6,000 due to the cost-of-living exemption.
According to an analysis by the Institute for Taxation and Economic Policy, nearly 130 million people, including over 25 million children, would receive a tax cut through this legislation. Additionally, it is fully paid for through a tiered surtax on millionaires. The bill applies an additional 5 percent tax to the first dollar an individual makes over $1 million and the first dollar a married couple earns over $1.5 million annually; an additional 10 percent tax to the first dollar an individual makes over $2 million and a married couple makes over $3 million annually; and an additional 12 percent tax to the first dollar an individual makes over $5 million and a married couple makes over $7.5 million annually. This surtax would apply equally to wages and salaries as well as to capital gains and other investment income. The Yale Budget Lab has estimated that this surtax would impact 615,000 tax filers and raise $1.46 trillion over ten years.
See what leaders are saying in support of the legislation:
“Working people are one medical bill, one car repair, one bad break from not making rent,” said AFL-CIO President Liz Shuler. “They are working longer hours than ever and still struggling to put food on the table, while paying more in taxes than the billionaires. As we continue to fight for universal affordable health care, universal child care, and livable wages, the Working Americans’ Tax Cut Act is an important step toward getting working people some real relief.”
“The Working Americans’ Tax Act is one of the most important concrete actions Congress can take to ease the squeeze on working families. Right now, workers can’t pay the bills. Their wallets are being drained by a severe affordability crisis caused by the current administration and aggravated by the ‘Big, Ugly Bill’, which doubled down on tax cuts for billionaires, while stripping healthcare and nutrition assistance away from everyone else. This long-overdue legislation puts cash back in the pockets of millions of Americans who are being forced to choose between paying the rent and putting food on the table. It is a meaningful down payment on a solution that actually works for workers and the AFT is proud to be leading on it,” said Randi Weingarten, President of the American Federation of Teachers.
In addition to AFL-CIO and the American Federation of Teachers, this legislation has been endorsed by a broad range of organizations: Community Change Action, Demos, Get Out the Vote PAC, Indivisible, Institute for Policy Studies, MoveOn, National Education Association (NEA), NETWORK Lobby for Catholic Social Justice, Oxfam US, Patriotic Millionaires, People’s Action, Public Citizen, Social Security Works, Strong Economy for All Coalition, SURJ, Take on Wall Street, and United for a Fair Economy.
Click here to read the bill text and click here for a backgrounder.
