Tax Hot Topics
It will be nearly three more years before Democrats have the potential for a policy trifecta — the White House plus majority power in both the Senate and House — but the so-called “ideas primary” has begun. In recent weeks, past and possibly future presidential candidates have introduced new tax reform proposals, including plans that would eliminate income taxes for millions of Americans and one that would tap businesses for offsetting tax revenue.
Sen. Cory Booker, D-N.J., on March 9 rolled out a plan to more than double the current standard deduction to $37,500 for single filers and $75,000 for married couples filing jointly (from the current $16,100/$32,200) while raising the corporate income tax rate, increasing the tax on stock repurchases and tightening limits on executive compensation deductions. In his announcement, Booker also called for “strengthening the corporate tax rules” and “other measures to return fairness to our tax system” but did not provide details.
In addition to raising the standard deduction, Booker’s proposal includes increased and expanded child tax credits and earned income tax credits, and a “baby bonus” in the year of a child’s birth.
Grant Thornton insight:
Booker’s 2026 plan in many ways reverses the architecture of his 2019 approach by focusing on front-end tax relief that will provide significant benefits to middle-class households. While running for the Democratic presidential nomination in 2019, he focused heavily on targeted refundable tax credits, and the lowest income households were the primary beneficiaries. What has not changed is a reliance on higher corporate taxes to fund the benefits.
Also in Booker’s 2019 plan was the creation of federally funded savings accounts at birth, dubbed “baby bonds.” In their 2025 tax law, Republicans enacted a similar proposal, now called “Trump accounts.”
With the Democratic field wide open, Booker is considered a likely candidate for president again going into the 2028 election cycle. While he is currently running for re-election to his Senate seat, he said in a television interview last month, “I have not dismissed the idea of running for president again in 2028.”
Sen. Chris Van Hollen, D-Md., has proposed an even larger tax cut for middle-class households, to be financed almost entirely by those with the highest incomes. Under his plan, the standard deduction would be increased to $46,000 for single filers and $92,000 for joint filers — what he calls a “living wage” — while a new graduated surtax would apply to millionaires.
The proposal calls for a 5% tax on adjusted gross income (AGI) beginning at $1 million ($1.5 million for joint filers), a 10% tax on AGI greater than $2 million ($3 million), and a 12% tax on AGI above $5 million ($7.5 million).
Taking a different approach to taxation are Sen. Bernie Sanders, I-Vt., who caucuses with the Democrats and who ran for the party’s presidential nomination in 2016 and 2020, and Rep. Ro Khanna, D-Calif. On March 2, the two introduced a plan that would impose an annual 5% surtax on the assets of those with a net worth of $1 billion or more. While Sanders has previously proposed a progressive wealth tax, this latest version has a flat rate and focuses on a much narrower base.
The proposal would allocate the revenue raised by the wealth tax to $3,000 direct payments to each person (including children) in households earning less than $150,000; reversing Medicaid cuts in Republicans’ 2025 One Big Beautiful Bill Act; subsidizing childcare; and other benefits for “working families.” It also would allocate 1% of the revenue collected to tax enforcement at the IRS.
Grant Thornton insight:
Critics of a wealth tax, which would be based on assets rather than income, have long argued that it would be an unapportioned “direct tax” barred by Article I of the U.S. Constitution and that the 16th Amendment authorized a direct tax only on income, not wealth.
The Sanders-Khanna bill calls for a federal “registry of ownership for assets,” where taxpayers would be required to provide an annual valuation of their various holdings, including real estate, investment accounts and privately held businesses. This tax would be imposed on the unrealized value of assets, and any enacted wealth tax would almost certainly be immediately litigated and reach the Supreme Court.
Following the 2017 passage of the Tax Cuts and Jobs Act, the Supreme Court held that the law’s deemed repatriation provision under Section 965 was a valid income tax, not a direct tax on property, but the majority explicitly stressed that its holding was limited and did not resolve broader questions relevant to wealth taxes.
The Senate’s top Democratic tax writer, Sen. Ron Wyden, D-Ore., said that his colleagues’ new proposals present contrasts with Republican tax provisions and will start the party’s debate over priorities, but he has not endorsed a specific plan. Wyden was chair of the Senate Finance Committee during the 2021-2022 period when Democrats last held a government leadership trifecta and passed the Inflation Reduction Act, which, among other provisions, enacted the current corporate alternative minimum tax and the 1% tax on stock buybacks.
Sanders is a member of the Senate Finance Committee; Booker and Van Hollen are not. (Van Hollen was the top Democrat on the House Budget Committee before he was elected to the Senate in 2016 and served as a tax writer on the House Ways and Means Committee for several years before that.)
Reconciliation 2.0, ‘Green Book’ not happening
The Trump administration does not plan to push for a second major economic policy package using the budgetary maneuver known as reconciliation and says it will skip, for the second year in a row, releasing the standard revenue proposals, commonly referred to as the Green Book, that typically accompany the president’s annual budget.
“In theory we’ve gotten everything passed that we need,” Trump said when asked about a second budget reconciliation package during a televised interview with Fox Business Network in February. “Now we just need to manage it. But we’ve gotten everything passed that we need for four years.”
Likewise, Assistant Treasury Secretary for Tax Policy Ken Kies said during public remarks on March 10 that the administration is more focused on implementing the One Big Beautiful Bill Act rather than any new revenue proposals.
“I think, right now, the administration feels very comfortable with the bill that was enacted,” Kies said, according to a Politico report. “And so I think our focus is going to be on continuing to implement that bill so I’m not sure there’s going to be a need for a Green Book.”
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