HR-8294-119
Referred to the House Committee on Ways and Means.
Sponsored by Donald Beyer (D-VA)
What it does
The Millionaires Surtax Act would impose an additional federal income tax on individual income exceeding $1 million per year. The bill is currently in committee in the House and the full text specifying the surtax rate, structure, and any exemptions has not been publicly released. Based on the bill's title, it would layer an extra tax on top of existing income tax rates for high earners.
Who benefits
The federal government would receive additional revenue that could fund existing programs or reduce the deficit. Lower- and middle-income taxpayers who do not earn above $1 million would not be directly subject to the surtax. Workers and communities that depend on federally funded programs could benefit indirectly if new revenue is directed toward those programs.
Who is hurt
Individuals with annual income exceeding $1 million would face a higher effective tax rate. This group includes high-earning professionals (physicians, attorneys, executives), business owners whose pass-through business income exceeds the threshold, and investors with large capital gains or dividend income. Closely held small businesses structured as S-corporations or partnerships could be affected if their owners' share of income crosses the threshold. Tax attorneys and accountants may see increased demand, while financial planners serving high-net-worth clients may need to restructure strategies.
Supporters argue
Supporters argue that the top 1% of earners hold a disproportionate share of national income and wealth, and that a surtax on millionaires would generate substantial federal revenue while affecting only a narrow slice of the population. They contend that similar surtax structures — such as the 3.8% Net Investment Income Tax enacted in 2010 — have functioned without significant economic disruption, and that concentrating the tax burden on the highest earners is consistent with the progressive structure of the U.S. income tax system established by the Sixteenth Amendment.
Opponents argue
Opponents argue that adding a surtax on top of already-high marginal rates — which can exceed 50% when combined with state income taxes in high-tax states — may reduce incentives for investment, business formation, and risk-taking among the most economically productive earners. They contend that high earners have significant flexibility to defer, restructure, or relocate income to avoid the surtax, meaning projected revenue gains may fall short of estimates, as seen with similar measures in states like Maryland and New Jersey that experienced high-earner outmigration after enacting millionaire taxes.
Constitutional context
The Sixteenth Amendment grants Congress broad authority to tax income without apportionment among the states, which covers a straightforward income surtax. The Origination Clause (Art. I, §7, cl. 1) requires revenue bills to originate in the House — this bill was introduced in the House, satisfying that requirement. If the surtax were structured to reach unrealized gains, Moore v. United States (2024) would be directly relevant, as the Supreme Court declined to resolve whether the Sixteenth Amendment requires realization, leaving that question open.
Checks and balances
Congress gains revenue authority through this bill; the IRS would implement and enforce the surtax; the courts retain authority to review any constitutional challenges, particularly if the surtax is structured to reach unrealized income.
Historical precedent
The Affordable Care Act (2010) established a 3.8% surtax on net investment income for individuals earning above $200,000 ($250,000 for joint filers), which represents a directly analogous federal income surtax targeting high earners.