New Tax Bracket Compromise Bill is Coming

State Representative John Kowalko is circulating and Representatives Paul Baumbach and Madinah Wilson-Anton and Senator Dave Sokola are signing on as sponsors of a new bill that will be filed after June 23, 2021 that intends to reform our income tax brackets such as that higher earners pay more than those who make $60,000 or less.

Obviously there will be no time this year to consider the bill in committee and act on it before June 30. But the bill will be there when the session resumes in January 2022.

Representative Kowalko: “Our existing PIT tax schedule consists of 6 brackets and there were remarks made [in the committee hearing on HB 64] that additional brackets would add more complexity. I heard those concerns and created this version with a consolidation of lower brackets so that we have maintained 6 brackets total. Also note that this bill differs dramatically from HB 64, in that it offers a tax cut to individuals who earn less than $125,000 in taxable Delaware income. The 2 higher brackets only effect a minimal amount of Delaware taxpayers and their additional burden has been decreased.”

Current Tax Rates
$60,001 and above6.6%

And under the new Bracket bill, here are the rates:

Proposed New Rates
$250,001 and above6.95%

I can see a problem already, if I understand this correctly, and even though this bill is advertised as cutting rates for those making under $125,000, for people making between $5,001 to 10,000, the tax rate would increase slightly from 3.9% to 4%. For those making between $20,001 and $25,000, the rate they pay would increase slightly from 5.2% to 5.5%. So that’s no good, since Republicans will declare that we raised taxes on the working class, which would be true.

So here is my quick and untested proposal:

The Delaware Dem Plan
250,001 and above6.99%

This way, no one can say that their tax rate was increased, and everyone making below $125k can say their tax rate was cut.

Delaware politics from a liberal, progressive and Democratic perspective. Keep Delaware Blue.

2 comments on “New Tax Bracket Compromise Bill is Coming

  1. I haven’t done the math, but remember that all cuts at the bottom also go to people at the top. The folks making 130,000 are only paying the extra 0.25% on the last $5,000. They are getting a 1% cut on the first 5,000.

    • John Kowalko

      That is correct. Thanks for pointing that out. The net dollars are saved at those lower earners. Maybe not a lot but they pay less on the same earnings.

      Rep. John Kowalko

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