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Sanders plan would be 'biggest tax increase' as share of economy: analysis

Sanders plan would be 'biggest tax increase' as share of economy: analysis
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The tax proposals offered by Democratic presidential candidate Bernie SandersBernie SandersBiden endorses Texas Democratic House candidate Julie Oliver Ocasio-Cortez rolls out Twitch channel to urge voting Calls grow for Democrats to ramp up spending in Texas MORE would raise significantly more revenue than the proposals from fellow candidate Joe BidenJoe BidenTrump and advisers considering firing FBI director after election: WaPo Obama to campaign for Biden in Florida Supreme Court reinstates ban on curbside voting in Alabama MORE, according to an analysis released Thursday by the Urban-Brookings Tax Policy Center (TPC).

TPC estimated that Sanders’s tax proposals that are not entirely focused on financing his “Medicare for All” health plan would raise federal revenues by $9.9 trillion over 10 years, and his tax proposals dedicated to financing Medicare for All would raise another $13.4 trillion. 

In total, Sanders’s tax proposals would increase revenue by more than 8 percent of gross domestic product (GDP) from 2021 to 2030, TPC said.

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“It would be the biggest tax increase in U.S. history, measured as a share of the economy,” said Len Burman, an institute fellow at TPC. 

In contrast, the group estimated in a report earlier this month that Biden’s tax proposals would raise $4 trillion, or 1.5 percent of GDP. Biden’s health plan is smaller in scale than Medicare for All, and he’s proposing tax changes of a smaller magnitude.

The report's release comes as Sanders is planning to assess his campaign after Biden won primaries in three states on Tuesday and holds a commanding lead in the primary race. Sanders is running to the left of Biden, and progressives are hoping that he stays in the race to continue to promote his policy ideas.

Sanders has offered a number of proposals aimed at raising taxes on wealthy individuals and corporations. 

These include subjecting earnings over $250,000 to Social Security payroll taxes, raising the corporate tax rate from 21 percent to its pre-GOP tax law level of 35 percent, taxing corporations’ foreign income at the same rate as their domestic income, creating a wealth tax and creating a financial transaction tax.

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Sanders has also listed a number of financing options for Medicare for All, including raising the top individual income tax rate to 52 percent, taxing capital gains at the same rates as ordinary income, creating a 4 percent income-based premium and creating a 7.5 percent payroll tax for employers. Sanders’s Medicare for All plan would also make some current health-related tax incentives less necessary, which would also raise revenue.

TPC, which is led by a former Obama administration official, analyzed the Medicare for All-focused tax proposals separately from those that aren’t focused on financing the health plan, because the group plans to issue a report in the future that analyzes the combined effects of both Sanders’s tax and health proposals related to Medicare for All. The analysis of the non-Medicare for All proposals includes tax proposals that Sanders would partially use to finance Medicare for All and partially for other purposes.

The $9.9 trillion raised by Sanders’s non-Medicare for All tax proposals from 2021-2030 amounts to 3.6 percent of GDP over that time period. About $5.2 trillion of the revenue would come from Sanders’s proposed increases in corporate taxes, and about $2.3 trillion would come from the wealth tax, TPC estimated.

The $13.4 trillion raised by Sanders’s Medicare for All tax proposals amounts to 4.9 percent of GDP from 2021 to 2030. Burman said that Urban Institute researchers estimate that the cost of Medicare for All is significantly greater than the amount of revenue that would be raised by Sanders’s financing options.

TPC’s Thursday paper only includes a distributional analysis of the non-Medicare for All tax proposals. The group estimates that these proposals would raise taxes on all income groups, but that the high-income people would see the biggest tax increases. 

The group estimates that those with incomes above about $837,000 would receive an average tax increase of about $518,000, or 30.6 percent of after-tax income, in 2021, while those with incomes between about $52,000 and $93,000 would on average see a tax increase of $1,070, or 1.7 percent after-tax income. 

Nearly all of the increases in taxes for people in the bottom 80 percent of income would be due to indirect effects of increasing corporate taxes, TPC said.