HR2534-119

What This Bill Does

The Paying a Fair Share Act creates a new Internal Revenue Code section 59B minimum-style tax for high-income noncorporate taxpayers. A taxpayer with adjusted gross income above $1 million, or $500,000 for married separate filers, would owe an additional fair-share tax phased in over the excess above that threshold. The tentative fair-share tax is 30 percent of adjusted gross income after a modified charitable contribution deduction. The final tax accounts for regular tax liability, alternative minimum tax, payroll taxes under self-employment, Medicare, wage, railroad retirement, and net investment income provisions, and most credits. The $1 million threshold is indexed for inflation after 2025 and rounded down to the next $10,000. Estates and trusts compute adjusted gross income under section 67(e), and the tax is not treated as chapter 1 tax for most credits or AMT. The House sense provision frames the bill as an interim floor on taxes for the wealthiest taxpayers and a deficit-reduction step.

Who Benefits and How

Federal taxpayers benefit because the fair-share tax would raise additional revenue from high-income taxpayers who otherwise pay below the 30 percent floor. Deficit reduction advocates benefit because the bill is designed to cut the deficit by increasing high-income tax liability. Taxpayers below the $1 million adjusted gross income threshold benefit from not being subject to the new tax. Charitable organizations benefit indirectly because the 30 percent calculation still allows a modified charitable contribution deduction for itemizers.

Who Bears the Burden and How

High-income taxpayers above $1 million of adjusted gross income must calculate and potentially pay an additional fair-share tax. Married individuals filing separately face the threshold at $500,000 rather than $1 million. Trusts and estates with high adjusted gross income must apply the special section 67(e) computation. IRS administrators must implement a new part VIII tax, inflation indexing, payroll-tax coordination, credit limits, and charitable deduction rules.

Key Provisions

• Creates a fair-share tax for noncorporate taxpayers with adjusted gross income above $1 million, or $500,000 for married separate filers.
• Establishes a 30 percent tentative tax floor after a modified charitable contribution deduction.
• Requires coordination with regular tax, AMT, payroll taxes, and most credits to determine the additional tax owed.
• Indexes the threshold after 2025 and applies the amendments to taxable years beginning after December 31, 2024.