WASHINGTON — Much divides leading Democrats on tax policy, both on the presidential campaign trail and on Capitol Hill. They disagree over whether to impose a wealth tax, on how much to tax high earners and on whether to raise taxes on the middle class in order to pay for a “Medicare for all” health care program.
But on one key theme, the leading presidential contenders and top Democrats in the Senate and House agree: If their party retakes the presidency and full control of Congress after the November election, wealthier people are likely to be paying higher taxes on their investment income.
How high those taxes would go, and how many Americans would need to pay them, would depend heavily on which Democrat won the White House.
In recent decades, relatively low taxes on capital gains have contributed to widening inequality, by allowing wealthy Americans who draw substantial income from such profits to pay lower effective federal tax rates than some workers who earn far less money entirely through their labor. In effect, the difference in rates helps the rich get richer, because their invested wealth can grow faster over time.
Both top Democratic presidential candidates propose to raise trillions of dollars in new tax revenue over a decade from corporations and the rich. The amount varies widely, however.
Former Vice President Joseph R. Biden Jr. has proposed just under $4 trillion in new taxes, while Senator Bernie Sanders of Vermont advocates spending plans that will require an estimated $50 trillion, or more, in new revenue.