House Democrats on Monday unveiled legislation that would raise an estimated $2.9 trillion in taxes and provide the foundation for the biggest investment in the U.S. social safety net in at least a generation.

The tax proposal—a crucial part of Democratic efforts to pass a $3.5 trillion budget bill—would also take a big bite out of a concept that has increasingly driven progressive Democrats over the past decade: income inequality. 

As demonstrated over the weekend, the liberal and conservative wings of the Democratic Party have a ways to go before they see eye to eye on the massive budget bill. But the House Ways and Means panel’s opening bid for how to fund the centerpiece of President Joe Biden’s agenda represents a big step forward in the debate. 

The measure’s tax increases target the nation’s top income earners, millionaires, billionaires, and large companies in the following ways:

Raises the corporate tax rate on companies reporting more than $5 million in annual income from 21% to 26.5%—a partial rollback of the GOP's 2017 tax giveaway to corporations; companies making $400,000-$5 million would see no change, and companies making less than $400,000 would get a rate cut to 18%.
Households with taxable income over $450,000 and unmarried individuals earning more than $400,000 would see the top income tax rate restored to 39.6%, up from 37%.
People earning more than $5 million would see a 3% surtax, which is expected to raise $127 billion.
The capital gains rate paid by investors would increase from 20% to 25%—a smaller than expected increase after Biden originally suggested doubling the rate.
Increased taxes on tobacco and nicotine products, which would raise an estimated $96 billion in revenues.
Raising the U.S. minimum tax on overseas earnings from 10.5% to 16.5%—well below the 21% proposed by the White House but closer to the 15% global minimum tax rate <a href="https://www.washingtonpost.com/us-policy/2021/06/05/g7-tax-us-yellen/">currently being negotiated</a> between the U.S., Canada, France, Germany, Italy, Japan, and the United Kingdom.

The nonpartisan Joint Committee on Taxation estimates the tax changes would raise roughly $2.07 trillion in revenue. But Democrats argue that savings in some places coupled with the economic gains generated by the bill’s investments in the economy will also help neutralize the bill’s price tag. Neal’s proposal omitted some of Biden’s original provisions, such as taxing the inheritances of the wealthy, but the White House largely welcomed the proposal. 

Spokesperson Andrew Bates issued a statement saying the proposal meets “two core goals” President Biden had laid out at the beginning of this process: “It does not raise taxes on Americans earning under $400,000 and it repeals the core elements of the Trump tax giveaways for the wealthy and corporations that have done nothing to strengthen our country’s economic health,” Bates said.

By and large, the proposal—which will surely undergo changes—pays for the majority (but perhaps not all) of the investments the president and Democrats hope to make in addressing climate change; providing paid family leave, free universal pre-K, and community college; and reducing the costs of health care, child care, and elder care, among other initiatives.

“Our proposals allow us to both address our perilously changing climate and create new, good jobs, all while strengthening the economy and reinvigorating local communities,” said Ways and Means Committee Chair Richard Neal of Massachusetts in a statement. “Taken together, these proposals expand opportunity for the American people and support our efforts to build a healthier, more prosperous future for the country.”

The wealth gap in the U.S. has worked its way back to historic proportions not seen in a century. 

“The magnitude of the inequality in America today is much larger than it’s been in years. We are in an era not seen since the Gilded Age at the end of the 19th Century, or the Roaring ’20s right before the Great Depression,” said Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University, told The Washington Post. “The question is: Will our political system be dictated by the vast majority of Americans, or a small minority of vested interests who want to keep their goodies for themselves?”

Some liberals don’t think the proposal goes far enough. Steve Wamhoff, director of federal tax policy at the left-leaning Institute for Taxation and Economic Policy, is one of them. 

“If the Ways and Means plan was enacted as is, Jeff Bezos and Elon Musk would still pay an effective rate of $0 on most of their income if they pass their assets onto their heirs,” Wamhoff said, adding that the bill’s still a “big improvement” over the current tax code. But since the tax code almost entirely taxes income rather than wealth, that’s a missed opportunity to help level the playing field while producing more revenue for Biden’s priorities. 

Congressional Republicans—the lawmakers who singlehandedly added some $2 trillion to the deficit with their 2017 tax giveaway to the rich—also have objections. But they’re literally incomprehensible. 

“This reckless bill will hurt working-class Americans at a time when they need support the most,” said T.W. Arrighi, spokesman for the National Republican Senatorial Committee.

We’ll be sure to get to back to you if any Republicans decide to join us here on Earth.