From Kiplinger · · 2m
7 new tax brackets proposed for high earners
A policy proposal would double federal tax brackets to 14, adding seven new rates for the wealthiest Americans.
In brief
A policy proposal would double federal tax brackets to 14, adding seven new rates for the wealthiest Americans. A Roosevelt Institute proposal suggests adding seven tax brackets above $900,000 to make high earners pay progressively higher rates as income climbs. Originally reported by Kiplinger.
Doubling the tax brackets
The Roosevelt Institute proposes expanding federal tax brackets from seven to 14, adding new rates specifically for the nation's highest earners.
The current system explained
Today's seven brackets range from 10% to 37%. Single filers hit the top 37% rate at $640,600, and married couples at $768,700.
The problem with one top rate
Once you exceed the 37% threshold, every additional dollar is taxed at the same rate, whether you earn $700,000 or several million.
“once a single taxpayer's taxable income exceeds $640,600, for example, every additional dollar is taxed at the same 37% marginal rate”
More brackets aren't new
The U.S. had 14 brackets in 1916 and eventually reached 56. From 1916 through 1986, the country averaged more than 27 brackets per year.
“From 1916 through 1986, the U.S. averaged more than 27 federal income-tax brackets a year.”
Reagan's tax reform changed everything
The 1986 Tax Reform Act reduced brackets from 15 to 2 and lowered the top rate from 50% to 28%.
Who would pay more
The proposal keeps the existing seven brackets and adds seven more starting at $900,000 of taxable income for single filers.
The moderate version
One scenario would raise the marginal rate gradually from 38% at $900,000 to 50% at $10 million.
The aggressive version
A second version would start with a 40% rate at $900,000 and eventually reach 70% at $10 million.
Not actually legislation
This is a policy recommendation, not a bill before Congress. No legislatively proposed changes would create these specific brackets and rates.
“These are illustrative scenarios, not legislatively proposed changes to the tax code.”
The revenue question
Higher rates could generate revenue as national debt hits $40 trillion, but the analysis doesn't offer a specific dollar figure for how much.
Broader reforms needed
Adding brackets alone won't solve income inequality. The proposal argues changes must be paired with reforms to capital gains, corporate taxes, and other areas.
“adding more tax brackets wouldn't, by itself, solve the income inequality problem in the United States”
What this means for you
For now, nothing changes. The seven existing brackets still apply, and only the portion of income in each bracket is taxed at that rate.
“moving into a higher bracket doesn't mean all of your income is taxed at that rate”
The takeaway
A Roosevelt Institute proposal suggests adding seven tax brackets above $900,000 to make high earners pay progressively higher rates as income climbs.
