Bernie Sanders’ tax plan might represent the “largest tax increase in peacetime history,” raising $15.3 trillion in new revenue.
But that new tax burden would be more than offset for 95% of U.S. households once the value of Sanders’ proposals for Medicare for All, free public college tuition, long-term care support, paid family leave and expanded Social Security benefits are considered.
That’s one conclusion drawn from a new analysis by the nonpartisan Tax Policy Center released Monday.
“The combination of Sanders tax and transfer proposals would increase average household income by nearly $4,300 in 2017,” according to the report.
But don’t get too excited. The news isn’t all good.
Sanders’ combined proposals also could add more than $18 trillion to deficits over the next decade — or $21 trillion including interest costs. That’s because the estimated costs of the spending proposals (an additional $33.3 trillion in federal outlays) would far outpace the new revenue his tax plan would bring in.
That additional debt could seriously undercut the potential benefits for Americans.
Other countries with universal health care programs typically offer less generous benefits than Sanders is proposing, and have much larger tax systems to support it, including a value-added tax on goods and services, according to Tax Policy Center director Len Burman.
“Sanders would have to rely on much more broad-based taxes, and that would change the distribution of net benefits,” he said.
Why not just raise taxes on the rich then? The candidate’s original tax plan already hits the super rich the hardest — reducing their after-tax income by about 45% on average. “So you could not rely on additional taxes from high income people,” said Burman.
And if the additional debt were not paid for, it could have negative effects on the economy, including higher interest rates and slower growth.
Normally the Tax Policy Center looks only at the effects of a candidate’s tax proposals. But given that Sanders has been very detailed in the new programs he would like to create — and given the magnitude of those programs — tax researchers used analyses from the Urban Institute’s Health Policy Center and its Income and Benefits Policy Center to do more of an interactive analysis.
The Sanders campaign, which had initially complained that the Center had analyzed his tax plan in a vacuum, was only somewhat satisfied with the broader take on the fiscal impact of the candidates’ plans.
“The authors of this report get it half right,” said campaign policy director Warren Gunnels.
“The good news is that this report estimates that low-and-middle-income households would experience an even bigger increase in their income than we have estimated. … The bad news is that this report wildly overestimates the cost of Senator Sanders’ health care plan.”
