WASHINGTON – Rep. Chris Van Hollen, D-Md., on Monday unveiled his “action plan” to address income inequality, an effort backed by senior Democrats that aims to tackle uneven wealth distribution through tax reform.
The centerpiece of Van Hollen’s pitch, which he announced at the Center for New American Progress, a left-leaning policy institute, is a tax credit that would cut $2,000 a year off tax bills for two-earner households earning less than $200,000, which he said would raise a typical worker’s income by $40,000. The proposal also includes a provision to limit executive performance bonuses without paycheck increases for employees.
The plan advocates a much stronger economic policy stance than President Barack Obama and Democratic leaders took last year, indicating a Democratic push to combat GOP tax breaks.
“The tired Republican mantra of cutting tax breaks for the wealthy will only make this problem worse,” Van Hollen said in his speech, noting compensation for the richest Americans has been increasing, while paychecks for middle-class workers have remained stagnant.
Income inequality is making headlines for shattering records established during the “Roaring Twenties,” with more than 20 percent of before-tax income flowing to the richest one percent of households, according to analysis by the Center on Budget and Policy Priorities of Congressional Budget Office data. Van Hollen emphasized that although the economy is improving, the middle class is falling behind.
“If you want a growing pie for all, you need a pie where everyone can get a bigger slice,” Van Hollen said.
Van Hollen said he will introduce the provision about big corporation tax deductions, called the CEO-Employee Paycheck Fairness Act, within 10 days. The rest, he said, will come “over a period of time.”
House Minority Leader Nancy Pelosi, D-Calif., is among those who have endorsed the proposal, according to the Washington Post. But with Republicans in control of Congress, the plan may face harsh opposition.
Republicans are expected to back their own comprehensive tax plan, led by Ways and Means Committee Chairman Paul Ryan, R-Wis. Brendan Buck, a spokesman for the committee, has already dismissed Van Hollen’s proposal, according to the Washington Post.
“In theory, I think there’s opportunities for compromise,” said Michael Strain, resident scholar at the American Enterprise Institute. “Republicans are going to have a pretty serious problem with what Van Hollen is doing to incentivize pay raises for workers… but there is also a big tax cut, and that’s obviously something that Republicans like. The question is how to pay for it.”
Strain said Republicans will push for spending cuts, whereas Democrats will want to raise taxes on the wealthy and on businesses. “A lot will depend on the president and on how much of a push this really gets. My suspicion is that nobody thinks there is a very good chance of any of this becoming law over the next 22 months or so.”
Van Hollen said he is “not surprised” by Republicans on Capitol Hill, adding, “We wanted to kick off the debate.”