A Realistic Look at Sander's Tax Plan
It’s looking increasingly grim for the Bernie Sanders campaign, which, despite having only 920 delegates to Hillary Clinton’s 1,223, is remaining optimistic about their chances to turn the tables in the upcoming primaries and caucuses. While the consensus among political pundits is to view Clinton as the inevitable Democratic nominee, Sanders supporters point to the historic Michigan upset, in which Sanders beat Clinton 50% to 48%, despite being behind in the polls by 20 points, as an indication that this self-declared “democratic socialist” might still have a chance to win his party’s nomination.
Bernie Sanders, the son of Jewish Polish immigrants, began his political involvement in the 1960s with the Civil Rights Movement while studying political science at the University of Chicago. In the 1970s, Sanders made four unsuccessful bids in U.S. Senate and Vermont gubernatorial elections, representing Liberty Union, a socialist party.
In 1981, Sanders ran for mayor of Burlington as an Independent and won by a mere 10 votes. As mayor, Sanders saw to local matters, such as securing a minor league baseball team for the town, but also showed an uncommon interest in foreign policy -sending letters to leaders in the UK, Soviet Union, and China, as well as making diplomatic visits to Cuba and Nicaragua. He summed up his policy with the motto, “Think globally, act locally.” After four terms as mayor, he served in the U.S. House of Representatives as an Independent for Vermont’s at-large district from 1991 to 2007. In 2007, Sanders won a hard-fought senate race in which his Republican opponent spent 7 million dollars of his own money, and was reelected to that position in 2012.
Despite his initial focus on foreign policy, over his career, Sanders has narrowed his focus to domestic matters. He has characterized his campaign as a revolution that aims to root out the influence of money in politics. Sanders is best known for his repeated stump speeches against the millionaires and billionaires, in which he argues, in his Brooklyn accent, for greater income equality through higher taxes on corporations and the wealthy. Sanders has revealed a plan to make college tuition debt-free, and he continues to push for a single-payer health care system, which he calls “Medicare for all.” He wants to increase the minimum wage to $15 an hour, compared to Clinton’s push for $13. His position on social issues has made him a favorite among younger voters who are less likely to have negative associations with the idea of socialism compared to the baby boomer voting block that largely supports Clinton. Clinton and her supporters have characterized his plans as unrealistic and too costly.
To pay for his expansion of the national social safety net, Bernie Sanders is proposing several tax increases. He has proposed a tax on Wall Street speculation. Clinton has a similar but more limited plan. Under Sanders, each trade would be taxed at a rate of 0.5% for stocks and 0.1% for bonds. He wants to end the Social Security tax cap, which is currently set at $118,500, so that households earning more than that amount will pay the same 12.4% that households making less do.
Sanders has co-sponsored the FAMILY Act, a bill that would increase taxes on wages by 0.4% to pay for paid family and medical leave. He has proposed a 6.2% increase on the payroll tax, mostly on the employer side, which would increase taxes for all Americans, but most of his plans are aimed at the wealthy. Taxing capital gains and dividends as ordinary income, expanding the estate tax, and capping tax deductions at 28% for individuals making $250,000 or more are some of his policies that, added up, would have the wealthiest paying, by some estimates, a rate of up to 77%. That’s a rate that hasn’t been seen in the United States since 1967.
If a Sanders plan were to make it through Congress, and many doubt that it could even with a Democratic majority and a President Sanders in the White House, the majority of Americans would see an increase in the taxes they pay. However, for the majority of Americans, these taxes would be offset by a savings in healthcare costs. The healthcare system Sanders hopes to instate would be “modeled after what the Canadians are doing.” Canada is one of many countries today that has successfully moved from a private healthcare system to a public system.
The speculation tax that Sanders and Clinton have proposed is similar to tax laws already in place in countries like the UK, South Korea, and Hong Kong, and a similar law is expected to be put in place in the European Union as early as this summer. Proponents of the law argue that it is no different than the sales tax already in place on goods and services, but some argue that it could slow the economy by discouraging investments.
Whereas Clinton is standing by her easy-to-understand and comforting pledge to not raise taxes on middle-class families, Sanders is trying to sell Americans on a more nuanced plan that he believes would save them in the long run. He argues that his policies are more in line with “FDR on social security and LBJ on Medicare,” while Clinton presents herself as “a progressive that gets things done,” and argues her policies are more likely to be realized in a Congress that depends on Republican cooperation. Sanders is often criticized by centrists as being too idealistic, but now, as his chances of winning the nomination have dwindled, his campaign needs the optimism it has been running on more than ever.