Bernie Sanders proposes $15 Trillion in tax increases
Posted: Fri Mar 04, 2016 2:29 pm
Democratic presidential candidate Bernie Sanders has proposed $15.3 trillion in tax increases, according to a new report, and would raise rates on virtually everyone, including the politically all-important middle class.
Not surprisingly for a candidate who has made income inequality his central issue, Sanders’ plan would wallop the wealthy, an analysis released Friday by the Tax Policy Center shows.
The top 0.1 percent would see their tax bills go up by more than $3 million, the report said, which would cut their aftertax incomes by almost half.
But Sanders, going where few politicians dare, would also raise taxes on middle- and low-income families, with those in the dead center of the income spectrum facing a $4,700 tax increase. That would reduce their aftertax incomes by 8.5 percent, the report said.
The report underscores the stark choice facing Democratic primary voters when it comes to tax policy.
Rival Hillary Clinton has proposed a number of tax increases as well, but she has targeted the wealthy and on businesses, and plans a tax cut for those further down the income ladder.
“There is a very, very clear choice,” said Len Burman, head of the nonpartisan Tax Policy Center. “They really couldn’t be more different.”
“Bernie Sanders is very open about raising taxes on everybody, with the argument that people at all income levels are going to be benefiting from the new spending programs that he’s proposing,” Burman said.
The group, which has issued a string of independent assessments of the presidential contenders’ tax plans, said yesterday that Clinton’s plan would raise taxes by $1 trillion. The Clinton campaign told the group she plans a tax cut for middle- and low-income families later in the campaign, though TPC said it didn’t have details.
Sanders wants tax hikes to pay for a raft of new government benefits, including health care for everyone, free college tuition, paid family and medical leave, and increased infrastructure spending.
There is a risk that Sanders’ tax increases won’t be enough to cover all the additional spending, worsening the government’s already dire long-term budget outlook, the TPC said, though it didn’t examine that question in detail.
Nor did it examine whether, for some taxpayers, the value of Sanders’ new government benefits would outstrip the cost of his tax increases.
“We do not account for the effects of the new government programs on income,” Burman said. “We focused on the tax side, and we’re not really experts on the spending component.”
The report underscores how Sanders is a rare presidential candidate in either party who is willing to spell out in detail how he’d finance his legislative agenda. By contrast, the Republican candidates have proposed tax-reform plans that would cost trillions, saying they would be financed by thus-far unspecified spending cuts and economic growth.
Russell Simmons, left, and Lucy McIntosh attend the 2016 All Def Movie Awards held in Los Angeles.
In all, Sanders has proposed more than two dozen separate tax increases, the report shows, and in every major class of taxes.
He’s called for multiple increases in the income taxes paid by individual Americans that would push the top rate to 54 percent, from the current 39.6 percent.
At the same time, Sanders would create and expand payroll taxes. He's proposed a new 6.2 percent tax on employers as well as an additional 0.2 percent payroll tax on both employers and their workers. He would also apply the current 12.4 percent Social Security tax to incomes over $250,000.
Corporate taxes would go up, mostly by going after multinational corporations using accounting maneuvers to slice their tax bills. Sanders would end so-called deferral, which allows companies to postpone paying taxes on overseas profits; target tax-advantaged corporate inversions; and place new limits on the credits companies receive for paying taxes in other countries.
Sanders would almost triple capital gains taxes to 64 percent, a level unseen since World War I. At the same time, he would shut off ways the wealthy have long used to avoid paying the tax, such as “stepped up basis at death,” which allows them to pass assets onto heirs tax free.
And he would create two big new excise taxes, including a carbon tax, the first time that’s been proposed by a major presidential candidate.
Sanders would charge $15 per ton of carbon dioxide emissions in 2017, with the fee ramping up to $73 per ton by 2035. That would raise $900 billion over the next decade, after accounting for rebates he would give to people of middle and low income, who presumably would be hit with higher energy prices, the Tax Policy Center said.
He would also create a new financial transaction tax that would charge 0.5 percent on stock sales. That would produce an additional $692 billion, according to the analysis.
The top 1 percent of earners would bear 38 percent of the total tax increase proposed by Sanders, according to the analysis, while those in the top fifth of incomes would pay 68 percent of his levies.
That top quintile, which includes those earning more than $142,000, would see taxes go up by an average $44,759. Those at the very bottom of the income ladder would see their taxes go up by $165, and those in the second quintile of incomes — between $23,000 and $45,000 — would pay an additional $1,625.
Many of Sanders's tax increases are so big and novel that it tested the ability of the Tax Policy Center to predict their likely effects.
“It was a difficult estimating task,” said Frank Sammartino, a senior fellow at the group. “For changes of this magnitude, we’re really going into unknown territory."
Read more: http://www.politico.com/story/2016/03/b ... z41xqSNI4G
