The Indicator from Planet Money How taxing the wealthy could work
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May 4, 2026 
Chris Van Hollen, U.S. Senator known for progressive tax proposals, outlines a plan to eliminate federal income tax for many lower earners while adding surtaxes on very high incomes. He explains how a millionaire surtax would fund cuts. Experts discuss revenue estimates, avoidance risks, and how higher top rates might affect work incentives and entitlements.
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Federal Income Tax Cut For Lower Earners
- Chris Van Hollen proposes making earnings below $46,000 tax-free to relieve people working paycheck to paycheck.
- The tax-free amount phases out near $80,000 and excludes payroll taxes like Medicare and Social Security.
Surtaxes On Millionaires Fund Cuts
- The plan is designed to be deficit neutral: surtaxes on millionaires fund the tax cuts for lower earners.
- The Tax Foundation's analysis finds net revenue roughly similar, projecting only a very small net revenue loss.
Higher Rates May Reduce High Earner Work Incentives
- Garrett Watson of the Tax Foundation estimates the proposal would slightly reduce economic output because high earners may work less under higher marginal rates.
- The surtax adds 5% over $1M, 10% over $2M, and 12% over $5M, raising incentives tradeoffs for top earners.