Placing the tax burden entirely on the ultra-wealthy undermines the already difficult project of expanding government services and increasing infrastructure investment.
July 21, 2026 — Democrats have a new favorite policy idea: Tax cuts.
From Congress to statehouses, Democrats are taking up a crusade that has historically been associated with Republicans. Some of these proposals, like one from Senator Chris Van Hollen, are paired with higher taxes on the wealthy, making them revenue neutral. Others, like one from Senator Cory Booker, would add trillions to the deficit.
These proposals have sparked a “wonk revolt” from economists and policy scholars who fear the consequences of shrinking the tax base, even if it is expanded on the top end. Liberal economists mostly believe that tax reforms should generate significant new revenue to contribute to expanded government services, shrink the deficit, or stabilize social security.
But the craving of many voters for “affordability” is strong, and their faith in government is weak. And Democrats are competing with a Republican party whose main selling point to voters is lower taxes, and who have long stopped worrying about the deficit.
That leaves Democrats in a difficult position on taxes. Trying to beat the Republicans at their own game is risky, but so is ceding the issue to the GOP. This debate inevitably opens up an even larger set of questions about restoring faith in government or at least generating more support for an expansive governmental role. As Democrats develop their policy agenda, will it be possible for them to push for broad-based tax cuts while simultaneously convincing the public that it’s worth investing more in areas like healthcare, housing, and green infrastructure?
Democrats’ tax cut proposals
Booker’s proposal, released in March, would increase the standard deduction from $16,100 to $37,500 for single filers and from $32,200 to $75,000 for joint filers, meaning nearly all individuals and couples would pay no tax on that portion of their income below those thresholds, including high earners.
His proposal would also expand the earned income and child tax credits and raise income taxes on single filers earning above $256,000 and joint filers earning over $512,000. The median household would see an 85 percent income tax cut, Booker projects.
The increase in the standard deduction would account for the majority of the bill’s cost, representing $334 billion in foregone revenue in the policy’s first year, according to the Yale Budget Lab. The increase in top rates would only raise revenues by $87 billion that first year. On net, the bill is projected to yield a $5.4 trillion revenue loss over its 10-year lifespan, the Yale Budget Lab projects. (In a press release, Booker said his plan would be “fully paid for” by closing loopholes, increasing corporate taxes, and “other measures.” Those measures have not been released and are not part of the bill text. Booker’s office did not respond to requests for comment.)
Van Hollen’s proposal, also released in March, would eliminate income taxes for individuals making less than $46,000 and couples earning up to $92,000. For individual filers earning more than $46,000, and couples earning more than $92,000, additional income up to $80,000 and $161,000, respectively, would be taxed at a maximum rate of 22.5 percent. Above those thresholds, the benefits would no longer apply, making Van Hollen’s proposal more targeted than Booker’s.
Van Hollen’s proposal would be paired with a new 5 percent surtax on individual incomes above $1 million, and joint incomes above $1.5 million, with further escalations in rates starting to kick in for individual incomes above $2 million and joint incomes above $3 million. The tax cuts and tax increases would cancel each other out: The Yale Budget Lab estimates that the net budgetary impact of the bill would be roughly neutral over its 10-year lifespan.
Other Democratic politicians have also recently proposed broad-based tax cuts. Keisha Lance Bottoms, the Democratic nominee for Georgia governor, has proposed an income tax exemption for teachers. Representative Katie Porter, a former candidate for California governor, proposed exempting families earning under $100,000 per year from state income taxes. Michigan U.S. Senate candidate Abdul El-Sayed recently proposed freezing property taxes for seniors.
Meanwhile, Republicans haven’t stopped proposing big tax cuts, either. After passing a massive tax cut in 2025 through the “One Big Beautiful Bill Act,” President Donald Trump mused about replacing the income tax with tariff revenue in his most recent State of the Union address. That would, in effect, replicate the nation’s Gilded Age tax system. Florida Governor Ron DeSantis is pushing a bill that would exempt 92 percent of the state’s homeowners from property taxes. Cities and counties are already preparing by initiating hiring freezes, cutting spending, and looking for new revenue sources.
Why is this happening now?
Democrats’ tax break proposals appear to be a response to the popularity of President Trump’s “no tax on tips” and “no tax on social security” policies, said Will Raderman, a senior policy advisor for the Searchlight Institute, a centrist Democratic advocacy group. “They seem to poll well, and he ends up winning the election,” he said. “You’ve got a number of Democratic politicians seeing that and thinking that is the direction to move.”
Booker and Van Hollen have described their proposals as a way to make life more affordable for the middle class. “It’s the most just way to go about dealing with the biggest challenge for voters right now, which is the costs,” Booker said in an interview with the political new site NOTUS.
“We are facing an affordability crisis in the United States, and Congress must use every tool available to lower costs for the American people – this means not only lowering prices but also increasing the money in working class American’s pockets,” Van Hollen said in a statement to Remapping Debate. “My Working Americans’ Tax Cut Act cut will help individuals who are living paycheck to paycheck afford their basic living necessities by allowing them to keep more of their paycheck.”
There may be other factors leading to the embrace of tax cuts on the left. Amid a rising cost of living, a growing share of Americans now say their federal income taxes are too high. Trust in government has been on the decline in recent years, particularly since the Covid-19 pandemic, which could be contributing to tax fatigue.
At the same time, economic inequality has gotten so extreme that many people have come to believe that taxing the ultra-rich can fund the entirety of the American state. Vox policy columnist Eric Levitz calls this idea “99 percentism: The belief that only the top 1 percent, or even the small coterie of billionaires within it, should be expected to finance government benefits.”
Would it be possible to fund a robust welfare state solely by taxing the ultra-wealthy?
There is, in fact, empirical research on this question. In his book The Good Society, UC San Diego sociologist Lane Kenworthy explored whether it would be possible to fund a welfare state in the U.S. along the lines of existing social democracies solely by taxing the wealthiest Americans.
In his calculations, Kenworthy assumed that the U.S. government would need to grow its share of spending on social services from roughly 20 percent of GDP to roughly 30 percent, bringing it up to a level that social democracies typically provide.
In order to raise these revenues solely by taxing the wealthy, effective tax rates on the top 5 percent of earners would have to increase from 33 percent to 84 percent, Kenworthy found. In an alternative scenario, the US could impose a 1.5 percent annual wealth tax on the wealthiest 5 percent of households and raise the effective tax rate on top earners to 58 percent.
“It would be a real struggle to do it focusing on just the top 5 percent,” Kenworthy said. He added that the impacts of these kinds of taxes are very unpredictable, depending on how those subject to them respond to higher rates. Wealth taxes, in particular, have been on the decline in other countries, as governments find they tend to generate less than predicted. (If enacted, they might also be declared unconstitutional by the ultra-conservative majority of the United States Supreme Court.)
In fact, the overall trend among largest welfare states, including those in Scandinavia and Western Europe, is a move away from progressivity and towards a broader base. “Lack of progressivity is not the thing that sets the American tax system apart,” Kenworthy said. “If anything, it’s probably the reverse fact.”
France, for example, has a special income tax that goes toward social services, the contribution sociale généralisée. It’s essentially flat, with most workers paying 9.2 percent of their income toward this tax, in addition to ordinary income taxes.
France, like the vast majority of countries besides the U.S., also has a value added tax. Effectively a national sales tax, VATs are the way most social democracies generate the majority of their government funding. They’re broad-based — everyone is subject to them, and they’re generally levied at a flat rate — but since the wealthy consume much more, they wind up paying the lion’s share of the proceeds.
“The countries with the most redistributive tax and spending policies do tax the middle class quite heavily, then they use it to fund their state benefits that also go largely to the middle class,” said Larry Zelenak, a professor at Duke University School of Law who studies tax policy. High taxes on the wealthiest members of society are a necessary, but not sufficient, part of that equation, he said. “Sure, soak the rich, but I think you’re going to have to soak at least the upper middle class as well.”
Investing government revenues in services rather than tax breaks is supported by global best practices, Kenworthy said. “We know from now a lot of experience that all else equal, it’s probably better to give people health insurance and childcare and elder care than to give them money.”
Representative Alexandria Ocasio-Cortez, one of the few progressives to criticize Booker and Van Hollen’s proposals, has expressed a similar sentiment. “If people want to choose between whether they want guaranteed health care or a 5% tax rebate, people are going to want guaranteed health care,” Ocasio-Cortez told NOTUS. She called the proposals “a complete defunding of the world that young people will have to live in, and they are asking young people to foot the bill.”
But according to Van Hollen, tax cuts and expanded social services are not a zero-sum game. In his statement to Remapping Debate, Van Hollen said “we should not stop” at his tax proposal, and that he also supports “several wealth tax proposals to raise additional revenue to be invested in critical services on behalf of the American people.”
Broad-based tax systems with universal benefits yield more citizen buy-in
The middle class tax cut bills sketched out by Van Hollen and Booker — legislation that would not increase overall revenues — would be outliers compared to other tax systems around the world.
Political science research shows a connection between the structure of tax systems and the types of government benefits those systems are able to provide. In a 2009 comparative study of global welfare state funding, University of Tokyo political scientist Junko Kato found that countries with broad-based tax systems are correlated with more universal government benefits and countries with highly progressive tax systems are correlated with targeted government benefits. The former system is more stable, she argued, since the majority of the population feels the benefit of their tax dollars.
“Because the targeted provision decreases the possibility for a majority to receive benefits, self-interested individuals wish to pay little, and, if possible, nothing at all,” she wrote. “Conversely, because the universal program provides certain benefits to everyone, a majority are more likely to support it, and this majority support serves to maintain or increase its cost.”
Among industrial democracies, Junko wrote, “the early institutionalization of regressive taxes is a critical cause of a self-enforcing process of high tax and high welfare.”
A bit of a gamble?
Kenworthy said Democratic Party policymakers should be honest about the global picture with their constituents. Focusing tax revenue generation solely on the wealthy is “a bit of a gamble,” he said. “We’re explicitly rejecting a different path that says just raise tax rates on everybody, where we do have a lot of evidence that it can work.”
There’s a clear template for achieving progressive social policy outcomes through broad-based taxation. Though the Democratic party generally supports these policy outcomes, it may, paradoxically, be moving away from the tax policies that make them possible.
Of course, policy design and political strategy are two different matters entirely. What would it take for the Democrats to convince voters to accept higher taxes in exchange for better government services?
In the next installment of this two-part series, we’ll explore how the disconnect between tax policy preferences and social spending goals emerged in the Democratic party, and the politically fraught strategies that could help Democrats break out of the race to the bottom with Republicans on taxes.