Currently, Delaware’s income tax system is a hybrid flat tax that favors the wealthy. That is not a surprise over the history of this state, which catered to the weathy Du Ponts locally and the wealthy corporations nationally.
It is a surprise for a state that has been run by Democrats for the last twenty-five years. Currently, residents making $60,000 are paying the exact same income tax rate as a billionaire: 6.6%
For years, State Representative John Kowalko, who I describe as Delaware’s Bernie Sanders and the anchor of the Progressive side of the Overton Window, has been introducing one or more bills creating two new tax brackets above $125k over the past few sessions. Because if we are to have a progressive income tax structure in this state, it would be nice to have the obscenely wealthy pay a higher income tax rate than someone making $60,000, which is an income that is smack dab in the middle of the middle class income range. Here are the tax brackets:
| Tax Bracket | Tax Rate |
|---|---|
| $2,000.00+ | 2.2% |
| $5,000.00+ | 3.9% |
| $10,000.00+ | 4.8% |
| $20,000.00+ | 5.2% |
| $25,000.00+ | 5.55% |
| $60,000.00+ | 6.6% |
House Bill 15 would tax personal income of between $125,000 and $250,001 at 7.1 percent and above $250,000 at 7.85 percent. So the table now looks like this:
| Tax Bracket | Tax Rate |
|---|---|
| $2,000.00+ | 2.2% |
| $5,000.00+ | 3.9% |
| $10,000.00+ | 4.8% |
| $20,000.00+ | 5.2% |
| $25,000.00+ | 5.55% |
| $60,000.00+ | 6.6% |
| $125,000+ | 7.1% |
| $250,000.00+ | 7.85% |
Rep. Kowalko got close to at least adding one new tax bracket in 2017 during the budget crisis in June of that year. But Andria Bennett voted with the GOP to defeat that bill, earning such deserved scorn that it brought her to tears. Now it seems that she has voted to release this bill in committee. Perhaps she has learned her lesson.
But it does seem that seem that Rep. Quinn Johnson may be opposed to the bill, because he agrees with the Republican and Trumpian idea that limiting itemized deductions (which raises taxes on the lower and middle classes) is a better idea. Quinn also apparently opposes repealing the youth and training wages. It’s like he wants to be a Republican and is in the process of applying to be one.
Now that HB15 has been released from committee,Rep. Kowalko hopes it receives a floor vote soon. The bill will require 25 votes for passage, since it is a tax bill and thus requires a 3/5ths majority. There are 26 Democrats in the House. So that means we can lose one Democrat. But we cannot lose two. So the fates of this bill comes down to Quinn Johnson and Andria Bennett.
WHERE IS THE BILL? Out of Committee as of 4/10/19
DEMOCRATIC SPONSORS – Kowalko, Sokola, Ennis, Bentz, Brady, Lynn, Osienski
REPUBLICAN SPONSORS – None.
YES VOTES –
NO VOTES –
HB14 creates the following new tax brackets: 1. At $125,000, with a rate of 7.10%. 2. At $250,000, with a rate of 7.85%. This Act also creates a tiered reduction of the otherwise available itemized deduction based on the individual’s taxable income. It was considered along with HB15 in committee but it did not make it out with its sister bill. That probably means this bill will die in committee.
WHERE IS THE BILL? House Revenue & Finance as of 12/13/18.
DEMOCRATIC SPONSORS – Kowalko, Sokola
REPUBLICAN SPONSORS –
YES VOTES –
NO VOTES –
Rep. Kowalko’s longtime work on this issue is highly commendable. Cudos to John K.
I’ve always questioned why Democrats, in particular, don’t use this as an ‘opportunity’ like this to lower the tax rate on people at the lower echelons of the income spectrum. Permutations are infinite but let’s start with the simple proposition that joint income of $150,000 doesn’t make you rich. Tax cuts in a time of stagnant wage gains… 🙂
The creating of new tax brackets is long overdue. I don’t think it goes far enough, create 2 or 3 more up to 5 million. And eliminate some of the lower brackets. 5 brackets of up to 25k is just not necessary. Also use the opportunity to lower taxes on everyone making under 100K.
While I’d love paying lower taxes, I think most people, myself included, are more upset by the fact that wealthy individuals pay so little compared to what they have. If we are ever to do something about the inequality we see in our nation and even in our small state, with the very wealthy controlling the decisions made by our government, we need to tax the wealthy and at the same time be willing to bear our fair share of the burden. Otherwise, we will be accused of looking for hand-outs.
This revision is long overdue and, if passed in legislature, will make life easier and better for everyone. Isn’t that what we really want?
I endorse this comment. I have solidarity with Leah. For real.