HB 128 – Progressive Reform of the State Income Tax Brackets

Each year over the last ten, State Representative John Kowalko would introduce a bill that would bring some progressive fairness to our supposedly progressive income tax rate scale. Yet, how progressive and fair can our rates be here in Delaware when someone making $60,001 is paying the same tax rate as someone making $600,000 and someone making $6 million a year.

Here is our current income tax rate structure:

• 2.2% of taxable income in excess of $2,000 but not in excess of $5,000;
• 3.9% of taxable income in excess of $5,000 but not in excess of $10,000;
• 4.8% of taxable income in excess of $10,000 but not in excess of $20,000;
• 5.2% of taxable income in excess of $20,000 but not in excess of $25,000;
• 5.55% of taxable income in excess of $25,000 but not in excess of $60,000; and
• 6.6% of taxable income in excess of $60,000.

Another Newark lawmaker, Representative Paul Baumbach, has introduced House Bill 128, which would create a new top threshold of greater than $100,000, taxing it at 6.9%. It would also lower rates on amounts of no more than $10,000. Here would be the new tax structure:

• 0% of taxable income less than $2,000.
• 1.9% of taxable income in excess of $2,000, but not in excess of $5,000.
• 3.9% of taxable income in excess of $5,000, but not in excess of $10,000.
• 4.8% of taxable income in excess of $10,000, but not in excess of $25,000 .
• 5.55% of taxable income in excess of $25,000, but not in excess of $60,000 .
• 6.6% of taxable income in excess of $60,000, but not in excess of $100,000 .
• 6.9% of taxable income in excess of $100,000.

I would add two more brackets of 7.1% for incomes over $250,000 and 7.5% for incomes over $500k. But that’s just me.

The bill has the House Minority Leader, Mike Ramone, as a cosponsor, along with a solid mix of progressive legislators and members of the House and Senate leadership. An interesting coalition. And perhaps a sign of this bill’s future success?

House Bill 128 – Introducing a New Tax Bracket for Incomes over $100,000	Currrent Status -House Revenue & Finance 4/21/23
House Sponsors – Baumbach, Longhurst, Minor-Brown, Morrison, Wilson-Anton, Dorsey Walker, Carson, Harris, Heffernan, Johnson, Lambert, Lynn. Moore, Neal, Osienski, Phillips	Senate Sponsors – Townsend, Sturgeon, Gay, Hoffner, Lockman, Sokola
House Yes Votes –	Senate Yes Votes –
House No Votes –	Senate No Votes –
House Absents or Not Voting –	Senate Absent or Not Voting –