Van Hollen: Reduce 'Wealth Disparity' by Shifting Tax Breaks From High-Earners to Low-Earners

By Susan Jones | January 14, 2015 | 10:13 AM EST

Rep. Chris Van Hollen (D-Md.) (AP File Photo)

(CNSNews.com) - The Obama administration says it hasn't had a chance to review Rep. Chris Van Hollen's proposal to "grow the paychecks" of middle class Americans by
curbing the tax breaks given to the "top 1 percent" and expanding tax breaks for the middle class.

It's an effort to narrow "wealth disparity," the Maryland Democrat announced earlier this week.

"I'm not in a position to render a final judgment on is the actual policy that's included in their legislation," White House spokesman Josh Earnest said on Tuesday. "We haven't had an opportunity to review all of the details.



"But, you know, I think when you take a look at what the president has proposed and what the president has done, using his own executive authority, that there are a variety of examples to indicate that the president is very focused on this issue."

Earnest noted that wages did increase in 2014 -- but "not as much as we would like." He said the Obama administration welcomes any attention on that issue.

'Rebalance'

Speaking to a liberal activist group on Monday, Van Hollen said the current tax code "is stacked in favor of people who make money off money (investments) and against those who make money off of hard work" (paychecks).

He said he wants to "rebalance" the tax code toward the middle class.

"Look, my goodness, if the tax code can be used to provide preferences for corporate jets and for racehorses, surely we can use the tax code to incentivize corporations to give their employees pay raises or invest in apprenticeship programs that result in better skills and bigger paychecks.



"And in the next few days, I will introduce the CEO-Employee Paycheck Fairness Act, which is designed to encourage corporations to give their employees fair pay increases when their top executives are getting big bonuses. It's very simple. It says that corporations cannot continue to take unlimited tax deductions...for their CEO and executive bonuses unless they're giving their employees a pay raise that reflects worker productivity plus cost of living increases."

Van Hollen also proposes a "paycheck bonus tax credit" of $1,000 per worker (or $2,000 for a two-earner couple), to boost the after-tax take-home pay of middle class Americans. The tax credit would be indexed to inflation and phased out at incomes of $100,000 for an individual, or $200,000 for a working couple.

He also wants to provide middle class earners with a "saver's bonus" of $250 for each year that an individual directs at least $500 of their "paycheck bonus" into a tax-deferred retirement account. "Right there on your tax return, check off you're going to do $500 or more direct to your savings, get the $250 saver's bonus and do it right there on your tax form," he said.

To reduce the marriage penalty for middle-class families, Van Hollen wants to give them a 20-percent tax deduction on up to $60,000 of their income. He said that would make the tax code "fairer" to families with two earners.

Van Hollen also recommends raising the child and dependent care tax credit.

"We estimate that over the next ten years, the elements of this plan will provide over $1.2 trillion in tax benefits that are aimed directly at boosting the take-home income of working middle class taxpayers and those working to join the middle class," Van Hollen said. "More than 150 million Americans will benefit in some real way from this effort to raise flat incomes experienced by so many."

The plan is fully paid for, he said, by curbing tax breaks for investment income (raising the capital gains tax, for example).

"Without increasing anybody's top tax rate, we can reduce this disproportionate share of benefits and dedicate the revenues to tax relief for hard-working middle class taxpayers and those working to join them."

Van Hollen also wants to impose a "a tiny fee on trading in the financial markets," to discourage "high rollers" from "gambling" in the stock market.

"American financiers and high rollers have claimed that such a fee would push financial trading overseas, but if we do it in concert with others, we can curb unproductive financial speculation and replace it with a source of revenue to support the action plan to grow the take-home pay of 150 million Americans, and in doing so grow the whole economy."