There’s a bit of a buzz in Congress about a prospective bill that hasn’t been introduced yet. Members are passing it around and the tentative title— likely to change— is the “Cost Of Living Tax Cut Act.” The barest bone explanation is that it’s a Federal Tax Exemption equal to the median cost of living for a single adult with no children. It’s meant to provide immediate, meaningful and permanent tax relief to address the rising cost of living brought about by the inflationary pressures of corporate price-gouging and supply chain disruptions, as well as establish the principle that the government should not tax its citizens into— or deeper into— poverty while billionaires continue to pay virtually no taxes. It ensures that the wealthy pay more and the benefit is limited to Americans with the lowest incomes. I got that explanation from Patriotic Millionaires which has been the driving force behind the prospective legislation. Think of it as a cost of living tax cut.
Erica Payne, co-founder and co-chair of Patriotic Millionaires told me that she sees that the current tax code— which Trump and GOP wrote in 2017 and the Dems did not change when they had a chance— taxes people into poverty. The median cost of living for a single adult with no children in the US is around $42,000 a year. The current standard deduction is around $15,000 so people pay taxes on all their income over that. “Why on earth,” she asked, “would a government tax 40% of its population into poverty while its billionaires pay nothing?” These provisions can certainly change but from what I understand these are the components of the bill that people on the Hill are talking about right now:
● Provides a Cost of Living Exemption (COLE) on federal taxes equal to the median cost of living for a single adult with no children (currently $41,600 per year), with proportionally larger COLEs for heads of household and married couples filing jointly.
● Phases out the COLE at just under 150 percent of the median cost of living for a single adult with no children, ensuring the benefit accrues exclusively to Americans challenged by the basic cost of living.
● Transfers the responsibility for the lost revenues from the COLE to the millionaire class by establishing a surtax on incomes over $1 million, similar to that passed by the House in 2021:
○ A 3% surtax on any income over $1 million per year,
○ An 8% surtax on any income over $10 million per year
The Patriotic Millionaires statement about the legislation states that “Today in America, more than 40% of Americans make less than the median cost of living for a single adult with no children, and more than 70% of Americans make less than the median cost of living for a single adult with one child. The Cost of Living Tax Cut Relief Act will ensure the federal tax code adheres to a simple, common sense principle: the federal government should not tax people into poverty. Until an individual is able to support their basic needs, they should not be required to contribute to the federal coffers. And to the extent that the federal government needs to recoup the lost revenues incurred by this relief, that obligation should be picked up by taxpayers with incomes over $1 million per year.”
The group and the members of Congress working on it seek to have the bill introduced in both houses of Congress prior to April 2025. Josh Weil’s congressional special election in Florida is April 1. Early vote exit polling is going extremely well. If he wins this blood red district that Ron DeSantis used to represent, the Cost Of Living Tax Cut Act will have a proud, unflinching co-sponsor. He’s campaigning on a plan of his own, American Dream Economy, which encompasses much of what the Cost Of Living Tax Cut Act aims to achieve including “giving seniors more frequent cost of living adjustments as well as helping working families with $5,000 tax credits per child and assisting gig workers and small businesses with loans. “The current proposed Cost of Living Tax Act,” he told me this morning, “attempts to give meaningful and immediate tax relief to working Americans in the form of a tax exemption for an amount of the median income (which amounts to $41,600). I will be proud to support sensible plans by Congress to provide economic relief for working Americans.”
Hopefully, Randy Bryce will be the Democratic candidate for the swing district Wisconsin seat Bryan Steil is wasting in Congress. This is a bill Steil would never support— but one Bryce will. “It’s a step in the right direction,” he told today, “but just think about never having to ask ‘how can we afford it’ if we’d just tax those who aren’t paying their fair share!”
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