Bernie Sanders’ plan to soak the rich
In sharp contrast to Trump, Sanders is proposing significant tax increases and new taxes — hitting most people modestly but the wealthy and corporations hard — to pay for an array of new government programs, from universal health care to infrastructure revitalization.
These hikes would add trillions to federal revenues over the next 10 years, but whether that’s enough to fund all of Sanders’ programs is up for debate. Here are some of Sanders’ main proposals:
• Replace the top three income brackets with four brackets, taxing households making over $250,000 at 37, 43, 48 and 52 percent;
• Create a 2.2 percent health care premium tax for households and a 6.2 percent payroll tax for employers to fund single-payer health care; a 0.2 percent payroll tax on employers and employees to fund paid family leave; and a tax on Wall Street speculation to fund free college tuition;
• Replace the top estate tax bracket of 40 percent with four brackets, taxing estates worth more than $3.5 million at 45, 50, and 55 and 65 percent; tax capital gains and dividends as ordinary income for households making over $250,000;
• Eliminate the alternative minimum tax and the cap on payroll taxes for incomes over $250,000 to expand Social Security.
Under Sanders’ plan, the top 1 percent of taxpayers would pay $525,000 more on average or about 34 percent in after-tax income, while the top 0.1 percent would dole out $3.1 million or 45 percent more in 2017, according to the Tax Policy Center.
Middle-income households would see their taxes rise by about $4,700, equal to a 10 percent increase in after-tax income. Those in the lowest-income bracket would pay an additional $165, a 1.3 percent increase.
Despite these hikes, the Sanders campaign argues that ordinary Americans would still save money since universal health care means employers and employees would no longer have to pay insurance premiums. This is bolstered by analysis from Citizens for Tax Justice, but other experts are more doubtful that the plan is actuarially sound.
Similar to Trump, Sanders is proposing to tax foreign profits earned by U.S. companies and to raise the cost of moving abroad. Sanders is unique in his calls to tax "Wall Street speculation" to pay for free college tuition and on carbon dioxide emissions.
Sanders’ proposals would bring in $10 trillion to $15 trillion in federal revenue, earmarked to finance various new programs, and could reduce incentives to save and invest, and raise costs for businesses.
There is debate over whether the package of new taxes would curb economic growth or stimulate it. And it’s unclear how Sanders would get policies that are more liberal than President Barack Obama’s through Congress.