Study: Sanders’s Tax Plan Would Raise $15.3 Trillion
According to a study, Bernie Sanders tax plan would raise an impressive $15.3 trillion over the next decade.
In addition, it would raise $25.1 trillion in the next decade after that.
The Hill reports:
Sanders has proposed a number of tax increases on individuals and businesses to pay for his spending plans, which include single-payer healthcare, paid family leave and infrastructure investment.
“Sanders is clearly betting that people are willing to pay for his expansive welfare state, and he’s very explicit about how the burden is going to be shared,” TPC director Len Burman told reporters.
TPC estimates that Sanders’ tax plan would raise far more revenue than rival Hillary Clinton’s plan. The group estimates that Clinton’s proposals would only raise $1.1 trillion over the next decade.
While Clinton’s proposals are “incremental,” Sanders’s wants to make radical changes, Burman said.
“There’s a very, very clear choice,” he said.
The tax plans of the top Republican presidential candidates — Donald Trump, Ted Cruz and Marco Rubio — would all cost trillions of dollars, according to TPC. Trump’s plan is the most expensive of the three, and Sanders’ plan would raise revenue by more than what Trump’s plan costs.
About 40 percent of the revenue increase from Sanders’ plan would come from a new 6.2 percent payroll tax and a 2.2 percent across-the-board increase in income taxes, which are part of Sanders’ plan to pay for his healthcare proposal. Another quarter of the increase comes from net hikes in the income, payroll and estate taxes paid by the wealthy, according to TPC’s report.
Taxpayers across the income spectrum would see tax increases, with the wealthy seeing the biggest tax hikes. In 2017, households in the middle fifth of income would see their taxes increase on average by almost $4,700, while people in the top 0.1 percent of income would on average have their taxes go up by more than $3 million, TPC said.
Since Sanders plans to spend the revenue he raises on various government programs, his plan is “unlikely to do much, if anything, to reverse the currently unsustainable path for public debt,” TPC said.
The group said it was “beyond the scope of this analysis” to determine whether the revenue raised from Sanders’ tax proposals would be enough to pay for his spending proposals. However, TPC pointed out that the cost of Sanders’ spending initiatives is “quite high.”
“If the revenues are insufficient to cover the new spending, the additional borrowing could increase interest rates, which would further raise investment costs,” TPC said. “However, the additional spending could generate its own positive economic benefits to the extent that it would increase the nation’s investment in productive physical and human capital.”
Sanders’s policy director Warren Gunnels criticized TPC for not looking at the economic gains that would be realized under the candidate’s proposals to help the middle class.
“Bernie’s tax plan is the mechanism for achieving universal health care and education, creating jobs, and a secure retirement,” Gunnels said. “Without estimating the benefits the American people would gain under these initiatives, the Tax Policy Center’s report is inaccurate and one-sided.”
Sanders’ proposed changes to individual income taxes include raising tax rates, with those making more than $10 million having a total income tax rate of 54.2 percent. He does this by capping regular income tax rates at 28 percent and then increasing all tax rates by 2.2 percent. After that, he would impose new graduated surtaxes on high earners’ adjusted gross income. Sanders’ proposal effectively caps the value on personal exemptions and itemized deductions at 30.2 percent, TPC said.
Sanders would tax capital gains at the same rate as ordinary income for high earners and would raise the net investment income surtax from 3.8 percent to 10 percent. As a result, the top capital gains rate would increase from 23.8 percent to 64.2 percent, according to TPC.
The Vermont senator would impose a 6.2 percent payroll tax paid by his employers to pay for his healthcare plan, as well as a 0.2 percent payroll tax paid by both employers and employees to pay for his paid family leave plan.
His business tax proposals include measures that would end the ability of foreign subsidiaries of U.S. companies to defer income taxes and would curb companies’ abilities to reincorporate overseas to lower their taxes.
Sanders would also propose two new excise taxes: a financial transactions tax and a carbon tax.
Photo credit: Raw Story.