This legislative session has been all about the budget and our legislators and Governors slowly waking up to the fact that they will have to raise taxes on the wealthy in order to balance the budget. Indeed, the budget that emerges from may be the most important piece of legislation in terms of progressive priority that the General Assembly passes this year,
if it adds two or more income levels and rates to the progressive tax structure.
One topic is getting little attention as lawmakers attempt to close an $83 million budget gap: raising income tax rates. And, specifically, raising taxes on Delaware's wealthiest earners, who have seen most of the state's wage gains in recent years.
Delaware's personal income tax is the largest source of state revenue, generating $1.2 billion this year - enough to fund almost 32 percent of total state government operations. Delaware's top income tax rate of 6.6 percent is charged on incomes $60,000 and above.
Some lawmakers now say adding a tax bracket for wealthier Delawareans could help solve the state's budget problems, while more fairly spreading the state's income tax burden.
Consider these potential scenarios, and their impact on annual state tax collections:
1. Raise rate to 7.6 percent on incomes > $125,000: $71.7 million
2. Raise rate to 7.6 percent on incomes > $250,000: $46.7 million
3. Raise rate to 7.1 percent on incomes > $125,000: $35.7 million
*Source: Delaware Department of Finance
Time to lay down the gauntlet: If Delaware's Democrats do not add more tax brackets and rates above our current highest rate of 6.6% on incomes over $60,000, they cannot be considered Democrats any further. Not just progressive Democrats. Actual Democrats. Seriously, you all might as well become Republicans right now. And that will be especially true if they go for any of Governor Markell's Republican ideas of repealing the Estate Tax or lowering corporate or income tax rates.
Repeat after me Democrats in the General Assembly: You will add tax brackets and rates on the wealthy. You will do it.