Poorer Americans get big tax cuts under Democratic plan while the rich get hikes

Low-income earners would get a big tax break if legislation proposed by House Democrats this week becomes law, while the tax burden for top earners would get heavier.

Taxpayers making above $1 million would see an 11% tax increase to their federal taxes under the House Ways and Means Committee plan, according to an estimate by the Joint Committee on taxation. On the other end, the tax liability for those making below $40,000 would drop by at least 24% — with much of the break coming in the form of tax credits.

“The plan very effectively targets high-income taxpayers with income taxes,” Steven Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center, told Yahoo Money.

The House Democrats plan proposes reverting the top individual income tax rate back to 39.6% and increasing the top long-term capital gains and qualified dividends tax rate to 25%. Additionally, the plan includes a 3% surtax on individuals with an adjusted gross income of more than $5 million.