HR-8294-119
Referred to the House Committee on Ways and Means.
Sponsored by Donald Beyer (D-VA)
What it does
This bill would add a 10% surtax on top of existing federal income taxes for individuals whose modified adjusted gross income (MAGI) exceeds $1,000,000 (for single filers) or $2,000,000 (for joint filers and surviving spouses). The surtax would apply only to income above those thresholds — not to total income. It would take effect for tax years beginning after December 31, 2026, and includes special rules for nonresident aliens, Americans living abroad, and charitable trusts.
Who benefits
Federal government, which would collect additional revenue. Programs funded by that revenue, and their beneficiaries, depending on how Congress appropriates the funds. Lower- and middle-income taxpayers who do not cross the thresholds and would not pay the surtax. Charitable trusts, which are explicitly exempted. Domestic businesses that compete with high-income individuals who might otherwise invest in competing ventures (indirect and speculative).
Who is hurt
Individual filers with MAGI above $1,000,000 and joint filers above $2,000,000, who would owe an additional 10% on income exceeding those thresholds. Small business owners, sole proprietors, and pass-through entity owners whose business income flows through to personal returns and may push them above the threshold. High-earning professionals (physicians, attorneys, executives, entertainers, athletes) in high-cost-of-living areas. Americans living abroad whose effective threshold may be reduced by the foreign earned income exclusion interaction. Estates and trusts (other than qualifying charitable trusts) with income above the thresholds.
Supporters argue
Supporters argue that the top marginal federal income tax rate has fallen significantly since the mid-20th century while income concentration at the top has grown sharply — IRS data show the top 0.1% of earners now capture a larger share of national income than at any point since the 1920s. They contend that a targeted 10% surtax on income above $1–2 million affects only a narrow slice of taxpayers while generating substantial federal revenue that could reduce deficits or fund public priorities. They further argue the bill is structurally straightforward, applying only to realized income already subject to existing tax law, avoiding the unresolved constitutional questions surrounding wealth taxes on unrealized gains.
Opponents argue
Opponents argue that the U.S. already imposes among the highest combined federal and state marginal income tax rates on high earners in the developed world, and that adding a 10% surtax could push effective rates above 60% in high-tax states like California and New York, potentially reducing investment, entrepreneurship, and taxable economic activity. They contend that pass-through business income — which flows to individual returns — means many affected filers are small and mid-sized business owners, not just wealthy individuals, and that higher taxes on this group may reduce hiring and capital formation. They further argue that behavioral responses such as income deferral, asset restructuring, and relocation could erode the projected revenue base, as documented in studies of prior high-income surtax proposals.
Constitutional context
The Sixteenth Amendment grants Congress broad authority to tax income without apportionment, and this bill taxes only realized income — wages, capital gains, business income — already within established income tax doctrine. Because the surtax applies to modified adjusted gross income (a realized-income concept), it does not implicate the unresolved realization question left open in Moore v. United States (2024). The Origination Clause (Art. I, §7, cl. 1) requires revenue bills to originate in the House; this bill was introduced in the House and referred to the Ways and Means Committee, satisfying that requirement.
Checks and balances
Congress gains revenue authority through this new surtax; the IRS (executive branch) would administer and enforce it, subject to judicial review of any disputed assessments under existing Tax Court and federal court procedures.
Historical precedent
The Affordable Care Act (2010) imposed a 3.8% Net Investment Income Tax and a 0.9% Additional Medicare Tax on high earners (thresholds of $200K/$250K), establishing a modern precedent for income surtaxes layered on top of the existing rate structure.