The Congressional Progressive Caucus budget proposal would raise federal tax revenues to record highs, yet still fails to balance over the next decade, unlike the House and Senate Republican budget proposals.
Under the Progressive Caucus proposal, tax revenue would rise to 21.5 percent of GDP, compared to the record-high 20.5 percent of GDP collected in 1944, at the height of American involvement in World War II. Tax revenue would rise by $6.6 trillion relative to current law over a decade, some of which would be raised through higher economic growth.
Changes to the individual income tax code would amount to a $1.4 trillion tax hike over a decade, according to analysis by the liberal Economic Policy Institute. The budget proposal would raise individual income taxes on those earning over $200,000 a year ($250,000 for joint filers), with the 33 percent tax bracket rising to 36 and the 35 percent tax bracket rising to 39.6 percent. It would raise taxes even further on incomes over $1 million, taxed at 45 percent, and over $1 billion, taxed at 49 percent, with other tax brackets for incomes above $10 million, $20 million and $100 million. Capital gains and dividends would also be treated as ordinary income, meaning they would be taxed at higher levels.
The Progressive Caucus budget proposal would also raise $904 billion in the next decade through various changes to the corporate tax code. The financial industry would be further hit by a new $908 billion financial transactions tax as well as $100 billion tax raised through a new tax on companies deemed systemically important financial institutions.
The financial industry is targeted because, as the budget writers note, they consider certain financial activities an “economic ‘bad.'” Under the same justification, pricing of carbon emissions would raise taxes by another $1.2 trillion over a decade. The federal excise tax on cigarettes would rise by $0.50 per pack, a $38 billion tax hike over a decade. Also, changes in the estate tax would raise taxes by $178 billion over a decade.
Federal spending would also rise to high levels in the budget. In 2024, federal spending would be 22.9 percent of GDP, up from 2015’s expected 20.8 percent. Federal spending peaked at 24.4 percent during the recession, but the budget proposal assumes economic growth, not recession. The average over 1990-2014 was 20.2 percent of GDP.
Sen. Bernie Sanders, I-Vt., is the only Senator in the Congressional Progressive Caucus. Sixty-nine members of the House are in the caucus, including co-chairs Congressman Raúl Grijalva, D-Ariz., and Congressman Keith Ellison, D-Minn.
The budget has been endorsed by a laundry list of liberal organizations, including Americans for Tax Fairness, Daily Kos, Moveon.org, and the National Education Association.
