Democrats Join the Tax-Cut Race

Concrete Evidence (March 16, 2026)

Courtesy Olga DeLawrence/Unsplash

It’s hard to be seen as the party of low taxes when you want to increase social spending and you’re up against today’s tax-cut-obsessed GOP. But Democrats seem increasingly fond of trying.

A decade ago, to calm worries about her spending ambitions, Hillary Clinton promised no tax hikes for families making less than $250,000. Joe Biden and Kamala Harris took that up to $400,000—several times what the typical household earns (about $84,000 as of 2024). And now, 2028 presidential contenders Senators Chris Van Hollen and Cory Booker have both suggested substantial tax cuts for middle- and even upper-middle-income taxpayers.

Don’t get me wrong: there’s still plenty of distance between the parties. Where Republicans might have cut taxes across the board, slashed a social program or two, and reassured us that the plan would “pay for itself” in higher economic growth, Van Hollen and Booker claim they’ll fund their middle-class tax cuts with higher taxes on those further up the income ladder.

Yet neither party is addressing the debt we’ve already built up. And as some progressive critics have pointed out (echoing a theme we’ve explored here), the revenue we can generate by hiking taxes on the rich is a scarce resource—and it’s odd for Democrats, of all people, to spend that resource shielding the middle class from taxes, as opposed to other priorities like poverty relief and health care.

Fortunately, whenever politicians release big tax plans, numerous experts jump into action to figure out how the proposals would affect households and the budget. Let’s dig deeper.

The Van Hollen idea is almost entirely focused on helping the middle (and somewhat-above-middle) class. It eliminates income taxes for people making less than $46,000 (twice that for couples); those earning up to $80,500 ($161,000 for couples) will get at least some tax cut too, as the new benefit phases out. Earnings above one million dollars, or $1.5 million for couples, get smacked with a 5 to 12 percent surtax to pay for these tax cuts, which the folks over at the Yale Budget Lab say is sufficient to make the math work.

Since lower-income Americans pay very little in income taxes to begin with—their taxes are weighted heavily toward the payroll taxes that fund entitlements—those in the first quintile (i.e., the bottom 20 percent) see a paltry 0.2 percent boost to their after-tax income, according to the Budget Lab. For the second, third, and fourth quintiles, those numbers are 1.9, 2.7, and 1.5 percent, respectively. And don’t forget: each percentage-point boost reflects a higher dollar amount for higher-income groups.

The Booker plan is friendlier to both the poor and the upper-middle class. He’d pump the standard deduction up to $37,500 ($75,000 for couples), boost the $2,200 Child Tax Credit (making it $3,600 for older kids, $4,320 for kids under six, plus a $2,400 “baby bonus” for newborns), and make the Earned Income Tax Credit more generous. He’d further remove the Child Tax Credit’s income phase-in, meaning parents can receive the credit as a check even if they don’t work at all in a given year. He’d hike taxes, though, on the top two brackets.

The Budget Lab, the Penn Wharton Budget Model, and Policy Engine all agree that this mix falls short of paying for itself—by around $5 trillion over ten years. However, Booker has vaguely mentioned other pay-fors as well that these groups aren’t modeling (given the lack of specificity), such as changes to corporate taxes.

Analysts also broadly agree that the benefits would be widely distributed under Booker’s plan. Per Policy Engine, the poorest 10 percent gain about 10 percent of their income in 2027, while the top decile loses just 1 percent (though the losses are concentrated on the extremely rich). Those in the middle deciles gain about 5 percent next year, though once again, don’t forget that richer households gain more absolute dollars from the same percentage change. The first decile gains about $1,000, versus around $8,500 for the ninth decile.

In the decades ahead, we’ll need to bring in more revenue, cut spending, or both to stabilize the debt. Republicans’ across-the-board, unpaid-for tax cuts are not a solution to the problems we face. But hiking taxes on the rich—and then using the proceeds to remove the middle class from the tax base—isn’t one either.

From the Manhattan Institute

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Other Work of Note

• Policy Engine is doing a lot of interesting things: They’ve got an AI tool where you type in a tax-policy idea and they simulate what effects it would have, and they worked on a new version of TAXSIM (which you can apply to survey data to estimate how much respondents paid in taxes).

• The Budget Lab also has a good analysis of how high federal debt drives up interest costs for everyone.

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