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House Democrats have proposed a top marginal tax rate of 39.6% for individuals, as part of a sweeping tax code change to fund climate investments and an expansion of America’s safety net .
That rate, an increase from the current 37% levy for the wealthiest taxpayers, would apply to single people with taxable income above $ 400,000, according to a legislative plan released Monday by the House Ways and Means Committee.
It would also apply to married persons filing a joint income tax return whose taxable income exceeds $ 450,000; heads of households over $ 425,000; married persons filing separate returns over $ 225,000; and estates and trusts over $ 12,500.
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If the plan becomes law, the changes would begin in 2022. They would raise $ 170 billion over the next decade, according to a Joint Committee on Taxation estimate released Monday.
The current top 37% rate applies to income thresholds higher than those proposed by House Democrats. In 2021, they will apply to single filers and heads of households when income exceeds $ 523,600 and to married spouses over $ 628,300, for example.
The Biden administration also called for a top tax rate of 39.6%. The maximum rate would rise to that level in 2026, even if Democrats fail to raise it in the short term, due to the provisions of the 2017 Tax Cuts and Jobs Act.
The proposal is among several others that House Democrats are aiming for taxpayers to earn more than $ 400,000 per year, including higher taxes on long-term capital gains and eligible dividends and changes in the how the rich use retirement accounts.
Changes to personal and corporate tax rules would bring in more than $ 2 trillion over the next decade, according to the Joint Committee on Taxation.