Bernie Sanders put a pretty big price tag — $14 trillion over a decade — on his Medicare-for-All proposal.
But he also promised to pay for it in full through higher taxes, especially on the rich.
A new analysis by the Committee for a Responsible Federal Budget suggests that the plan may increase deficits by at least $3 trillion, and that’s assuming Sanders correctly estimated the cost.
In a worst-case scenario, if the campaign underestimated the plan’s costs, it could add as much as $14 trillion, according to the CRFB.
The main issue: The tax hikes may not raise as much as Sanders is counting on.
For example, Sanders has proposed taxing capital gains and dividends as ordinary income. Under the Sanders plan, that would be as much as 62%: The new 52% top income tax rate he’s proposed, plus the 3.8% Medicare surtax and the 6.2% Social Security tax that Sanders would apply to income over $250,000.
The Sanders campaign estimates this change could raise $920 billion.
But the CRFB noted that the Joint Committee on Taxation, an official scorekeeper for Congress on tax measures, and others have asserted that a capital gains rate above 32% or so could end up reducing capital gains revenue, since investors would choose to hold on to more of their investments rather than sell them and pay the tax.
The CRFB estimates do not include the potential economic effects of Sanders’ higher income tax rates. But if they did, the outlook could worsen.
The group notes that even liberal economists — who favor taxing the wealthy more — think a total income tax rate over 73% could end up reducing income tax receipts because they would discourage working, among other things.
Under Sanders’ plan, if one considered all his proposed tax hikes on the wealthy, and combined them with state and local income tax rates, many could end up paying a top rate north of 80%.
The Sanders campaign dismissed the analysis by the CRFB. “Over 100 economists and health care experts have taken a look at Bernie’s health care plan and they all agree that it will save the American people thousands of dollars a year and is financed in a fair and responsible way.”