Last week, the Tax Foundation released an analysis showing that Democratic presidential candidate Hillary Clinton’s tax plan would barely raise any revenue while shrinking gross domestic product (GDP), spurring job losses and reducing wages. On Thursday, the center-right think tank published a report demonstrating that self-proclaimed socialist Sen. Bernie Sanders (I-Vt.) has a tax proposal that would be even worse for American families and businesses.
Using static scoring (simply performing arithmetic without considering economic implications), the Tax Foundation found that Sanders’ plan would cost American taxpayers an additional $13.6 trillion over the next decade. When accounting for real world economic conditions, they estimate a Sanders administration would actually collect $9.8 trillion throughout the next 10 years due to dramatically decreased economic output.
Currently, federal taxes make up 18 percent of the American economy. In fiscal year 2015, taxpayers sent more than $3.2 trillion to the Internal Revenue Service. Under Sanders’ proposal, Americans would pay $4.23 trillion in taxes each year, a 24 percent increase in current receipts.
Sanders would accomplish this by:
- Adding four new income tax brackets for high-income households, with rates of 37 percent, 43 percent, 48 percent and 52 percent.
- Taxing capital gains and dividends as ordinary income for households with income exceeding $250,000.
- Creating a new 2.2 percent “income-based [health care] premium paid by households.” According to the Tax Foundation, this is the equivalent of increasing all tax bracket rates by 2.2 percentage points, including increasing the top marginal income tax rate to 54.2 percent.
So, why does Sanders want to raise taxes on hardworking American families and job creating businesses so desperately and by so much? The Wall Street Journal has tallied all of his lavish new spending proposals, and they exceed $18 trillion.
Under Sanders’ proposal, Americans would pay $4.23 trillion in taxes each year, a 24 percent increase
Here are some of just a few of his cotton candy dreams:
- Free college tuition.
- Single-payer, government-run healthcare that makes Obamacare look like a free market achievement by comparison.
- Prosecuting — yes, prosecuting — climate change skeptics.
- Expanding Social Security (which is currently going bankrupt)
- Free pony rides for everyone (OK, this I made up, but you get the picture).
Sanders’ way of funding all that spending would be utterly disastrous for the economy. The Tax Foundation’s analysts believe his plan would reduce GDP by 9.5 percent. As a result, at least 6 million full-time workers would lose their jobs. For those still lucky enough to be working, their after-tax income will fall by 12.84 percent on average.
According to the Congressional Budget Office, the median household earned $59,000 in after-tax wages in 2011. Under a Sanders administration, this figure would drop to $51,424, a decrease of $7,576.
Sanders also supports raising the minimum wage to $15 an hour. As I’ve previously noted here at Opportunity Lives, economists widely reject this proposal, citing its catalyst of widespread job loss without any meaningful alleviation of poverty.
Here are some more of the job-killing policies contained within the Sanders proposal:
- A new 6.2 percent employer-side payroll tax on all wages and salaries.
- New limitations on the repatriation of profits through the foreign tax credit, which currently allows American companies to deduct the taxes they pay to foreign governments from the taxes they owe the U.S. government, in hopes of encouraging them to invest and create jobs at home.
- A new tax on financial transactions on the value of stocks, bonds, derivatives and other financial assets traded by Americans.
- The elimination of several business tax provisions involving oil, gas and coal companies.
Sanders’ tax proposal is the realization of a socialist’s most beloved aspirations. It takes more from hardworking American families to give more to the government. Then, after taking its cut (upwards of 40 cents of every dollar), the federal government will turn around and dole out benefits to the masses. Americans would be beholden to the state to provide their most basic goods and services — from health care to education — and Sanders would greatly impede individual liberty and consumer choice.
That one of the two major political parties is seriously considering nominating a socialist less than 30 years after President Reagan thwarted its creep across the globe, liberating starving and persecuted people, is a crying shame.
An artist’s rendition of Sen. Sanders plan | Photo: Pinterest
Ellen Carmichael is a senior writer for Opportunity Lives. Follow her on Twitter at @ellencarmichael.