Let’s take the rosiest of scenarios (from Bernie’s standpoint): He wins in a wave election in November - defeating Trump in a landslide, and also getting strong Democratic blue majorities in both houses of Congress. And President Bernie vows to implement every single part of his agenda that he said he’d do - free childcare, free college, Medicare for All, fighting climate change, etc.
Now, the increase in taxes may or will be offset by things such as cheaper healthcare, cheaper tuition, etc. But - if we look at taxes and taxes alone, for this thread - what percentage are we realistically looking at?
Using myself as an example: I am 32 years old, earn a bit under $50k a year, have no wife or kids, own no house, don’t go to college anymore, am healthy (rarely need healthcare,) etc. I currently pay around 15 percent in federal income tax + Medicare tax + Social Security tax. (We’ll ignore state/city tax for this thread.) Am I looking at perhaps 30 percent income tax under a Bernie presidency? Higher?
What about a family with several kids, a house, etc. (a typical American suburban home?)
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(Not a thread about whether Bernie’s taxation plans are good or bad - just asking how **much *the math is likely to come out to.)
He adds a 4% medical surcharge for medicare for all.
We collected about 1.68 trillion last year.
The lowest estimate for medicare for all is 13.5 trillion over 10 years.
Urban Institute thinks its 34 trillion
No way a 4% surcharge pays for medicare for all
So either it won’t work as advertised or it will cost a lot more than advertised.
His plans call for keeping the lowered Trump-tax-rates up to the $200k tier (for singles, $400k for couples). At that level your marginal rate increases from 35% to 40%. And then he wants to introduce higher tiers at $600k and higher with rates of 45% and 50%. Remember that’s marginal so it only impacts the dollars in that tier, not all your income. Then there’s the wealth tax, but that’s for assets beyond $20 million. (1% at that level)
I am hoping they reverse the change that Trump introduced with the higher standard deduction. It basically washes out for me because I no longer get any credit for all the interest and taxes I pay as a homeowner, and charitable giving too… better not to give anything and rent an apartment. Same deduction.
I believe Bernie wants to tax capital gains at the same rate as ordinary income, so that has to be taken into account. This is in addition to the half percent tax on all stock trades, a tenth of a percent on bond trades, and a 0.005 percent fee on derivative trades.
He is also going to raise taxes on the fossil fuel industry by $3T, increase corporate taxes by $2T, plus an income inequality tax on large corporations that pay CEOs at least 50 times more than average workers. He will also replace state and local income tax deductions with a flat $50K.
He assumes there will be a lot of income tax paid by the new jobs he thinks his Green New Deal will create, plus reductions in welfare payments (which is a little odd, since most welfare comes from states, not the federal government).
So the short answer is No, he won’t raise your taxes at all! Really! Just on those evil billionaires, investors, people who drive gas-powered cars, or own stock Really!
Hey Shodan, you forgot to mention the carried interest loophole that’s going to be closed. I mean, there’s all sort of taxes on millionaires that you forgot to scare low-to-moderate income earners about.
Hell yes, there are all kinds of taxes that Sanders is going to impose that I didn’t mention. If low- to moderate-income earners think that won’t affect them, or that the economy will hum along without noticing, that’s kind of what Bernie is counting on.
Putting more money in the pockets of the lower and middle classes should provide one hell of a boost to the economy, actually. Rich people holding an ever-increasing chunk of the pie is basically like taking money out of circulation; spending it on the rest of us is like bringing it back again.
If he wins and goes too far on taxes the 2022 election won’t be good for the Dems. Look at what happened in 1994 for example and that was nowhere near what Sanders wants to do.
If you don’t want to live in a house and contribute the charity, then I guess you have no tax incentive to for now. But I’m just happier with the larger deduction, no matter how it is achieved.
As others have said, for someone at your income I think the only new tax you’d pay is the medicare for all tax. That is 7.5% tax on your employer and a 4% tax on the employee.
However I think some of that tax on the employer is tax deductible (unlike FICA taxes). However I don’t know how much. Maybe if your AGI is closer to 35k while your total income is 50k, in that case maybe you’d pay 4% on that 35k, which is $1400 a year in taxes. But you’d save on premiums, copays and deductibles with medical care. However you don’t use much medical care as you said. But you still pay premiums.
An investment banker from Goldman Sachs drives through a working-class neighborhood, and decides to stop at a house for some political canvassing. He steps out of Aventador, walks up to the stoop, and raps on the filthy door after covering his hand with a Burberry handkerchief (you know, so he doesn’t have to actually touch it).
A man comes to the door, and the banker says, “This is a horrible and disgusting hovel you have here. It would be a shame if something happened to it… if you voted to tax me any more. TRUMP 2020 WHOOOO!”
And he walks back to his car, smugly satisfied that he has defeated socialism and made much better choices in his life than all those foolish poor people out there.
This would be amazing, best thing ever for tax policy and income inequality. The other high priority that needs to happen is getting rid of the reinvested dividends loophole.
