In a push to reengage their voting base Democrats have proposed a $2000 paycheck credit bonus as part of a wide ranging middle-class tax credits proposal. The paycheck credit proposal, architected by House Rep. Chris Van Hollen (D-Md.), would only be available to middle class Americans, which are defined as couples earning less than $200,000 or $100,000 for singles.
Other provisions in the Van Hollen proposal include tripling the child care tax credit and providing a $250 saver’s bonus for workers who save at least 50% of their tax credit. There are also provisions to reform the corporate tax code to incentivize companies to align CEO pay with worker pay and address the growing income inequality between those in the C-suite and the rest of the organization.
The $1.2 trillion proposal would be paid, not surprisingly based on past proposals, by imposing a new 0.1% financial transaction fee or tax on the richest 1 percent of Americans and closing tax related tax loopholes for the ultra-rich.
However with Republicans controlling Congress it is highly unlikely that this proposal will pass in its current form and is merely just the first volley in the tussle between Democrats and Republicans to capture the critical middle class’s vote leading into the 2016 presidential election. Republicans have yet to formally respond to the proposal but are more likely to focus on reforming the corporate tax code to improve economic conditions for business and the middle class, rather than raise tax rates for high income earners.