Everyone Pays Because Everyone Benefits

everyone pays

Social Security is an example of everyone pays because everyone benefits we see at the heart of the Bernie Sanders tax plan.


 
Everyone pays because everyone benefits is the theme of the Bernie Sanders’ tax plan which would raise $15.3 trillion over the next decade, according to an analysis released by the non-partisan Urban-Brookings Tax Policy Center (TPC). The plan would raise another $25.1 trillion in the subsequent 10 years. The estimates do not consider macroeconomic effects. By comparison Hillary Clinton’s proposals would only raise $1.1 trillion over the next decade.
 

Everyone Pays Because Everyone Benefits

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.
 
In 2017, households in the middle fifth of income would see their taxes increase on average by almost $4,700, reducing their after-tax incomes by 8.5 percent. People in the top 0.1 percent of income would on average have their taxes go up by more than $3 million.
 
Sanders’ proposed changes to individual income taxes include raising the income tax rate on those making more than $10 million to 54.2 percent from the current 39.6 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.
 
He 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.
 
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. He would also apply the current 12.4 percent Social Security tax to incomes over $250,000.
 
The presidential candidate would also propose two new excise taxes, a financial transactions tax and a carbon tax, charging $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 middle- and low-income people who presumably would be hit with higher energy prices. The new financial transaction tax would charge 0.5 percent on stock sales producing an additional $692 billion.
 

Bottomline

Everyone pays because everyone benefits. The top 1 percent of earners would bear 38 percent of the total tax increase proposed by Sanders, 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 its 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 while those in the second quintile of incomes — between $23,000 and $45,000 — would pay an additional $1,625. Those in the dead center of the income spectrum face a $4,700 tax increase.
 
There will be tax increases on individuals and businesses to pay for single-payer healthcare, paid family leave and infrastructure investment. I’m not convinced that everyone pays because everyone benefits is a powerful or persuasive message in 2016. He’s raising rates on everyone, including the middle class which makes his theme of income inequality a harder sell in my opinion. In all, Sanders has proposed more than two dozen separate tax increases, and in every major class of taxes.
 
Hillary’s plan is incremental and not nearly as ambitious though it is taxing banks, financial institutions, and other high net worth individuals. She is giving a tax cut to the middle and lower class. I think that message, not everyone pays because some people benefit more, is a lot more appealing in a general election.
 
Sanders and Clintons plans are both more transparent and revenue friendly than all of the top Republican presidential candidates. Donald Trump, Ted Cruz and Marco Rubio’s plans all cost trillions of dollars with Trump’s plan the most expensive of the three. In fact, Sanders’ plan would raise revenue by more than what Trump’s plan costs. Bernie’s 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.
 
Since Sanders plans to spend the revenue he raises on various government programs, it will do little about the debt. It’s hard to tell whether the revenue raised from Sanders’ tax proposals would be enough to pay for his spending proposals, but we do know they are expensive. Naomi Jagoda explains:
 

“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.”

 
Brian Faler shows what confronts Democratic voters in this primary:

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 non-partisan 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.

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Kwaisi France

An 80's baby forged in the 90's and unleashed upon the world in the 21st century, Kwaisi France is a Baltimore raised Brooklyn resident.

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