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04/15/2019 | Press release | Distributed by Public on 04/15/2019 13:51

Protect Your Paycheck

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The Facts:

  • Democrats love touting the 'free' benefits in their pricey policy proposals but are hesitant to talk about the hefty price tag.
    • Their reluctance is understandable, the inevitable tax increases that would result from such a massive government expenditure often sink progressive policies.
  • During his 2016 campaign, Sen. Bernie Sanders proposed $15.3 trillion in new taxes including a nearly $5,000 increase for middle-class families. Four years later the Democrat candidates have followed his lead proposing massive taxes across the board.
  • Democrats like to claim that they will finance their programs by taxing the rich and corporations, but the massive tax increases they have put forward would raise only a fraction of the funds needed to finance their programs.
    • Sen. Elizabeth Warren claims that her wealth tax will fund universal childcare, student loan debt relief, and down payments on a Green New Deal and Medicare-for-All but it would raise less than 3% of the money needed to fund the Green New Deal alone.
  • The bottom line is that raising the funds necessary for expensive programs would require 'broad tax increases that are likely to be partly borne by the middle-class.'
  • Sanders and other senators backing his government takeover of health care including Sens. Elizabeth Warren, Cory Booker, Kamala Harris, and Kirsten Gillibrand, have proposed payroll tax increases to fund the bill
    • Payroll taxes are regressive and would hurt low- and middle-income Americans the most, as they pay the highest payroll taxes as a percent of their income.

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DEMOCRATS LOVE TOUTING THE BENEFITS AMERICANS WOULD RECEIVE FROM SOCIALIST PROGRAMS LIKE SINGLE PAYER HEALTH CARE AND THE GREEN NEW DEAL, BUT ARE HESITANT TO TALK ABOUT THEIR HEFTY PRICE TAG

Democrats Don't Want To Talk About The Cost Of Their Pricey Programs Like Medicare-For-All And The Green New Deal

Sen. Bernie Sanders' (I-VT) Medicare-For-All Plan Extensively Detailed The Benefits It Would Provide But Has Less Information On How He Plans To Pay For It. 'The Vermont senator's plan has lots of details about what single-payer would cover. It has less information on how to pay for it.' ( Vox , 4/10/19)

Sen. Kamala Harris (D-CA) Brushed Aside Concerns About The Price Tag Of The Green New Deal, Saying 'It's Not About Cost.' ''One of the things that I admire and respect is the measurement that is captured in three letters: ROI,' Harris responded. 'What's the return on investment? People in the private sector understand this really well. It's not about a cost. It's about an investment. And then the question should be, is it worth the cost in terms of the investment potential? Are we going to get back more than we put in?''( Fox News , 3/12/19)

Democrats Avoid The Question Of Cost Because Financing Their Bills Would Require Unpopular Tax Hikes

Medicare-For-All Would Require 'Enormous Tax Increases.' 'Medicare-for-all is a proposal to move every American to a single government-run insurer that charges no deductibles or premiums. Doing so would significantly increase government expenditures - by as much as $33 trillion over a 10-year period, according to one conservative think tank's estimate - while offering health insurance to the Americans who lack it and preventing millions more from being forced into medical bankruptcy. It would require enormous tax increases to finance, although supporters maintain that they would be offset by zeroing out every family's spending on premiums and deductibles.' ( The Washington Post , 2/1/19)

Financing Sen. Sanders Medicare-For-All Bill Would Be An 'Immense Challenge' And Single-Payer Proposals Often Collapse When, Inevitably, The Country Has To Pay For It. 'The items on this list could no doubt be used to finance a national health care system. But eventually, someone is going to have to pick which items on this list become law - and that's where things get tough. Financing the health care system that Sanders envisions is an immense challenge. About half of the countries that attempt to build single-payer systems fail. That's Harvard health economist William Hsiao's estimate after working with about 10 governments in the past two decades. Whether he is in Taiwan, Cyprus, or Vermont, the process is roughly the same: Meet with legislators, draw up a plan, write legislation. Only half of those bills actually become law. The part where it collapses is, inevitably, when the country has to pay for it.' ( Vox , 4/10/19)

In 2014, Vermont Attempted To Create Single-Payer System But The Plan Was Abandoned After Legislators Found They Would Have To Increase Payroll Taxes By 11.5 Percent And Income Tax By 9 Percent. 'This is what happened when Sanders's home state of Vermont attempted to create a single-payer plan in 2014. Much like Sanders, local legislators outlined a clear vision of the type of health plan they'd want to extend to all Vermonters. Their plan was arguably less ambitious; it did require patients to pay money when they went to the doctor. But Vermont's single-payer dream fell apart when the state figured out how much it would need to raise taxes to finance its new system. Vermont abandoned the government-run plan after finding it would need to increase payroll taxes by 11.5 percent and income tax by 9 percent.' ( Vox , 4/10/19)

WHEN PRESSED, DEMOCRATS CLAIM THEY WILL PAY FOR THEIR PRICEY PROPOSALS BY TAXING THE WEALTHY AND CORPORATIONS, BUT THE MONEY JUST ISN'T THERE

In 2016, Sen. Sanders Proposed $15.3 Trillion In New Taxes Affecting 'Virtually Everyone.' Four Years Later The Rest Of The 2020 Field Has Followed His Lead Proposing Massive Tax Hikes Across The Board

During The 2016 Democratic Primary Sen. Sanders Proposed $15.3 Trillion In Tax Increase That Would 'Raise Rates On Virtually Everyone, Including The Politically All-Important Middle Class.' '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's plan would wallop the rich, an analysis released Friday by the Tax Policy Center shows.' ( Politico , 3/4/16)

  • Middle-Class Taxpayers Would Face A $4,700 Tax Increase, Reducing Their After-Tax Incomes By 8.5 Percent. 'The top 0.1 percent would see their tax bills go up by more than $3 million, the report said, which would cut their after-tax 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 after-tax incomes by 8.5 percent, the report said.' ( Politico , 3/4/16)

Sen. Sanders Proposed A Top Tax Rate Of 70%. 'Making the federal income tax more progressive, including a marginal tax rate of up to 70 percent on those making above $10 million, taxing earned and unearned income at the same rates, and limiting tax deductions for filers in the top tax bracket' ( Sen. Bernie Sanders , Accessed 4/12/19)

Sen. Harris Has Promised To Repeal The Tax Cuts Made In The Tax Cuts And Jobs Act . 'Sen. Kamala Harris, D-Calif., is sticking by the tax plan she proposed last fall. It would give middle-income households cash payments of up to $6,000 a year per family. The payments would be offset by repealing the 2017 GOP tax cuts and creating a fee on large financial institutions.' ( PBS , 2/19/19)

Sen. Booker Proposed Increases In The Estate Tax And Capital Gains Taxes . 'Sen. Cory Booker, D-N.J., meanwhile, has proposed a bill that would create savings accounts for every American child, paid for by an increase in the capital gains and estate taxes.' ( PBS , 2/19/19)

Pete Buttigieg Has Advocated For Income Tax Hikes, A Wealth Tax, Estate Tax Hikes, And A Financial Transactions Tax. 'Pete Buttigieg: I think we certainly need to consider a higher marginal tax rate for top income earners. Maybe it doesn't have to be as high as it was historically, but we should at least admit that when it was higher, the American economy was growing pretty well. We should consider a wealth tax. I think it makes sense. I think one of the things that's appealing about it is it's not very distortionary compared to an income tax, and that's important. The least distortionary tax probably is the estate tax, because you're dead. We should think about turning to a more equitable use of the estate tax, especially for the biggest and wealthiest estates. I'm interested also - if we could find the right way to implement it and the devil's in the details - in a financial transactions tax.' ( CNBC , 4/12/19)

Many Of These Proposals Would Raise Only A Fraction Of The Funds Needed To Fund Their Expensive Programs

Sen. Warren Claims That Her 'Ultra Millionaire Tax' Will Pay For Universal Childcare, Student Loan Debt Relief, And Down Payments On A Green New Deal And Medicare-For-All. 'That includes an Ultra-Millionaire Tax on America's 75,000 richest families to produce trillions that can be used to build an economy that works for everyone, including universal childcare, student loan debt relief, and down payments on a Green New Deal and Medicare-for-All. And we can make a historic investment in housing that would bring down rents by 10% across America and create 1.5 million new jobs.' ( Elizabeth Warren For President , Accessed 4/10/19)

  • In Reality, Her Taxes Would Raise Just $2.75 Trillion Over 10 Years A Fraction Of The Funds Needed To Fund The $93 Trillion Green New Deal Alone. 'Sen. Elizabeth Warren (D-Mass.) will propose a new annual 'wealth tax' on Americans with more than $50 million in assets, according to an economist advising her on the plan, as Democratic leaders vie for increasingly aggressive solutions to the nation's Soaring wealth inequality. Emmanuel Saez and Gabriel Zucman, two left-leaning economists at the University of California, Berkeley, have been advising Warren on a proposal to levy a 2 percent wealth tax on Americans with assets above $50 million, as well as a 3 percent wealth tax on those who have more than $1 billion, according to Saez. The wealth tax would raise $2.75 trillion over a 10-year period from about 75,000 families, or less than 0.1 percent of U.S. households, Saez said. Warren's campaign declined to comment on details of the plan.' (Jeff Stein and Christopher Ingraham, 'Elizabeth Warren To Propose New 'Wealth Tax' On Very Rich Americans, Economist Says,' The Washington Post , 1/24/19)

Sanders Is Proposing An Estate Tax Hike With A Top Rate Of 77%. 'After campaigning on a broadly similar plan in 2016 that had a lower top rate, Sanders is back with a proposal that would do the opposite, instead creating a multi-tiered structure for taxing the largest estates, including: A 77 percent rate on wealth over $1 billion. A 55 percent bracket on wealth from $50 million to $1 billion. A 50 percent bracket from $10 million to $50 million. A 45 percent bracket from $3.5 million to $10 million.' ( Vox , 1/31/19)

  • The Proposal Would Raise About $2.2 Trillion Over 10 Years, A Fraction Of The Cost Of Sen. Sanders' Medicare-For-All Bill. 'Sanders's staff estimates that their proposal would raise about $2.2 trillion in a 10-year window - but the exact nature of the window is uncertain because the impact of his plan is highly sensitive to the exact timing of the deaths of a relatively small number of ultra-wealthy individuals.' ( Vox , 1/31/19)

Taxing The Wealthy And Corporations May Be Great Talking Points, But The Revenue Just Isn't There To Fund Even The $93 Trillion Green New Deal Alone

The $93 Trillion Green New Deal Would Cost More Than $600,000 Per Family. ( IRS , Accessed 3/13/19)

If Democrats Taxed Every Household That Made More Than $100,000 At A 100% Rate They Would Still Fall More Than $32 Trillion Short Over 10 Years. ( IRS , Accessed 3/13/19)

  • Households Making More Than $100,000 Brought In $6.1 Trillion Of Taxable Income In 2016. ( IRS , Accessed 3/13/19)

Even Taxing 100% Of Corporate Profits Would Result In Just $20 Trillion Over 10 Years, Only 21% Of The Funds Needed To Support The Green New Deal. ( IRS , 3/12/19)

  • In 2013 (The Latest Year For Which Data Is Available) Corporations Brought In A Combined Net Income Of $2 Trillion. ( IRS , 3/12/19)

Democrats Would Have To Tax Every Household Earning More Than $30,000 At A 100% Rate To Generate $93 Trillion In Income Tax Revenue Over 10 Years. ( IRS , Accessed 2/25/19)

  • Households Making More Than $40,000 Brought In $8.9 Trillion Of Taxable Income In 2016. ( IRS , Accessed 3/13/19)
  • Households Making More Than $30,000 Brought In $9.5 Trillion Of Taxable Income In 2016 . ( IRS , Accessed 3/13/19)

THE REALITY IS THAT TO FUND THESE PROGRAMS DEMOCRATS WILL HAVE TO RAISE TAXES ON EVERYONE

Raising Revenue For Expensive Programs Would Require Middle-Class Tax Increases

Raising Revenue For A Program Like Medicare-For-All Would Require 'Broad Tax Increases That Are Likely To Be Partly Borne By The Middle Class.' 'Taxation is the most obvious way to collect that extra revenue, but so far none of the current Medicare for all proposals have included a detailed tax plan. Even if total medical spending stayed flat over all, some taxpayers could come out ahead and pay less; others could find themselves paying more. Raising revenue would require broad tax increases that are likely to be partly borne by the middle class, potentially impeding passage. Advocates, including Mr. Sanders, tend to favor funding the program with payroll taxes.' ( The New York Times , 4/10/19)

Financing The Green New Deal Would 'Inevitably Lead To Higher Taxes On Every American Family, Individual And Business.' 'Despite claims to the contrary, there is no way to pay for the Green New Deal solely by taxing the rich. The proposal will inevitably lead to higher taxes on every American family, individual and business. Even the more modest 'Medicare for All,' plan, which would cost roughly $32 trillion and is a component of the Green New Deal, increases taxes on middle class families and small businesses. Sen. Bernie Sanders, I-Vt., released $16 trillion worth of tax hike proposals as part of his Medicare for All plan, including a $3.5 trillion, 4 percent tax on all households and a $4 trillion, 7.5 percent payroll tax on businesses.' ( Fox Business , 3/26/19)

Sen. Sanders And The Other 2020 Candidates Backing His Medicare-For-All Bill Have Proposed Payroll Tax Hikes To Pay For The Program

To Finance Medicare-For-All Sen. Sanders Proposed A 4% Increase In Payroll Taxes. 'Creating a 4 percent income-based premium paid by employees, exempting the first $29,000 in income for a family of four.' ( Sen. Bernie Sanders , Accessed 4/12/19)

  • Sen. Sanders' Medicare-For-All Bill Is Backed By Several Other Senate Democrats Running For President Including Senators Elizabeth Warren, Cory Booker, Kamala Harris, And Kirsten Gillibrand. 'Sanders is reintroducing his plan at a moment when both American voters and Democratic legislators are increasingly backing a government-run health care system. Sanders will introduce his bill today with 14 cosponsors including presidential candidates Elizabeth Warren (D-MA), Cory Booker (D-NJ), Kamala Harris (D-CA), and Kirsten Gillibrand (D-NY).' ( Vox , 4/10/19)

Proponents Of Medicare-for-All Tend To Favor Funding The Program With Payroll Tax Increases . 'Raising revenue would require broad tax increases that are likely to be partly borne by the middle class, potentially impeding passage. Advocates, including Mr. Sanders, tend to favor funding the program with payroll taxes. For some people, any increase in federal taxes might be more than offset by reductions in their spending on premiums, co-payments, deductibles and state taxes. There is evidence to suggest that premium savings by employers would also be returned to workers in the form of higher salaries. But, depending on the details, other groups could end up paying more in tax increases than they save in those reductions.' ( The New York Times , 4/10/19)

Payroll Taxes Are Regressive And Would Hit Vulnerable Low- And Middle-Income Americans The Hardest

Most Americans, Particularly The Middle Class, Already Pay More In Payroll Taxes Than Income Taxes. 'As a new report by the Joint Committee on Taxation (JCT) shows, for all the attention income taxes receive, the tax burden for most Americans comes primarily from payroll taxes, not income taxes. There are two primary payroll taxes in the United States: the Social Security payroll tax (at a rate of 12.4 percent) and the Medicare payroll tax (at a rate of 2.9 percent). While the Medicare payroll tax applies to all labor earnings, the Social Security payroll tax applies only to an individual's first $132,900 of wages and self-employment income. This cap on the Social Security payroll tax is indexed to wage inflation.' ( Tax Foundation , 3/26/19)

The Payroll Tax Is Regressive, The Heaviest Burden Falls On Americans With The Lowest Income. 'The payroll tax is regressive, with the highest average rate falling on Americans with the lowest incomes. For example, for people making between $30,000 and $40,000, the average payroll tax rate is projected to be 8.8 percent, while for those making between $500,000 and $1 million, the average rate is projected to be 5 percent. This is in part due to the impact of the cap on taxable wages. In contrast, the income tax is progressive, with the average rate rising with income. For example, those making between $30,000 and $40,000 will pay an average income tax rate of -2.9 percent, while those making between $500,000 and $1 million will pay an average rate of 20.7 percent.' ( Tax Foundation , 3/26/19)

Payroll Taxes Are 'By Far' The Largest Tax Burden For Low-Income Americans. 'The largest tax burden for households in the bottom income quintile (the bottom fifth) tends to come from the payroll tax, followed by excise taxes and a small amount of corporate tax. The average federal tax burden tends to be much lower for low-income households than for high-income households. The Urban-Brookings Tax Policy Center estimates that in 2018, households in the lowest income quintile have a negative average income tax rate as a result of refundable credits-namely the earned income tax credit (EITC) and the child tax credit (CTC). That is, the payments the lowest-income households receive from refundable credits exceed any income tax they owe. In contrast, the average payroll tax rate for households in the lowest income quintile is 6.4 percent (very similar to the average rate of 6.9 percent for all households). The payroll tax is by far the most significant federal tax for households in the lowest income quintile, in terms of how much they pay.' ( Tax Policy Center , Accessed 4/11/18)

The Smaller Ones Income The Larger Share Of Their Income Goes To Payroll Taxes . 'A common argument regarding federal payroll taxes is that they are regressive. That is, above a certain amount, the more income one earns, the smaller the share of one's income goes to payroll taxes. This is because, as mentioned previously, only the first $118,500 of wages are subject to Social Security payroll taxes.' ( Tax Foundation , 8/2/16)

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