Tax break proposal would give back cash to middle class

WASHINGTON — A senior U.S. House Democrat on Monday unveiled a more aggressive agenda to boost workers’ paychecks by shifting significant tax breaks from the wealthiest Americans to the middle class.

The plan from Representative Chris Van Hollen has almost no chance of passage by the Republican-controlled Congress but is aimed at shaping Democrats’ policy vision for the 2016 presidential election.

Van Hollen portrayed his plan as an alternative to Republicans’ ambitions to cut top tax rates as part of an overall rewrite of the U.S. tax code this year.

Van Hollen’s plan calls for an annual “paycheck bonus” tax credit of $1,000 for individuals making less than $100,000 a year and $2,000 for married couples making less than $200,000.

It also includes a bonus of $250 for people who save at least $500 of this credit every year.

Van Hollen said his plan would limit corporate tax deductions of bonuses paid to executives in excess of $1 million unless the companies can show their workers are getting pay raises that reflect productivity and cost-of-living changes.

It would also give tax benefits to companies that invest in employee training programs and increase deductions for child daycare expenses.

“We can pay for these new tax benefits for working Americans by changing the ways our current tax code is rigged in favor of those who make money off of money and against those who make money from work,” Van Hollen said.

The plan goes beyond Democrats’ past efforts to address rising income inequality, which centered on raising the minimum wage. That message found little resonance among middle-class voters in November’s elections, leaving the party searching for a more effective message.

Republicans quickly labeled the plan a “massive” tax increase.

“Here in the House our focus is going to be on cleaning up the tax code so that we can lower rates for all taxpayers and help create good-paying jobs, not scaring them off with punitive tax hikes,” said Brendan Buck, a spokesman for Republican House Ways and Means Committee Chairman Paul Ryan.

Van Hollen’s plan cuts back tax breaks for the top 1 percent of earners in the United States. It also includes a 0.1 percent tax on stock trades, mostly from high-volume transactions. He said the tax would raise tens of billions of dollars each year.

He said the tax - what he called a “high-roller fee” - would curb “the kind of financial speculation that creates no value for the economy.”