Analysis of Sanders Tax Plan

[Cabal]

Details and Analysis of Senator Bernie Sanders’s Tax Plan

Key Findings:

• Senator Sanders (I-VT) would enact a number of policies that would raise payroll taxes and individual income taxes, especially on high-income households.
• Senator Sanders’s plan would raise tax revenue by $13.6 trillion over the next decade on a static basis. However, the plan would end up collecting $9.8 trillion over the next decade when accounting for decreased economic output in the long run.
• A majority of the revenue raised by the Sanders plan would come from a new 6.2 percent employer-side payroll tax, a new 2.2 percent broad-based income tax, and the elimination of tax expenditures relating to healthcare.
• According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly increase marginal tax rates and the cost of capital, which would lead to 9.5 percent lower GDP over the long term.
• On a static basis, the plan would lead to 10.56 percent lower after-tax income for all taxpayers and 17.91 percent lower after-tax income for the top 1 percent. When accounting for reduced GDP, after-tax incomes of all taxpayers would fall by at least 12.84 percent.

Over the past few months, Senator Bernie Sanders (I-VT) has released details of changes he would make to the federal tax code.[1] His plan would increase marginal tax rates on all taxpayers, through higher individual income tax rates and two new payroll taxes. The plan includes several provisions aimed at high-income households: it would raise the top marginal income tax rate to 54.2 percent, tax capital gains and dividends as ordinary income, replace the alternative minimum tax with a new limit on itemized deductions, and expand the estate tax. In addition, the plan would create a new financial transactions tax and move the U.S. toward a worldwide tax system by ending the deferral of foreign-source business income.

Our analysis finds that the plan would increase federal revenues by $13.6 trillion over the next decade. The plan would also increase marginal tax rates on both labor and capital. As a result, the plan would reduce the size of gross domestic product (GDP) by 9.5 percent over the long term. This decrease in GDP would translate into an 18.6 percent smaller capital stock and 6.0 million fewer full-time equivalent jobs. After accounting for the economic effects of the tax changes, the plan would end up increasing federal tax revenues by $9.8 trillion over the next decade.

Details of the Plan

Individual Income Tax Changes

• Adds four new income tax brackets for high-income households, with rates of 37 percent, 43 percent, 48 percent, and 52 percent.
• Taxes capital gains and dividends at ordinary income rates for households with income over $250,000.
• Creates a new 2.2 percent “income-based [health care] premium paid by households.” This is equivalent to increasing all tax bracket rates by 2.2 percentage points, and would raise the top marginal income tax rate to 54.2 percent.

Individual Income Tax Brackets under Senator Bernie Sanders’s Tax Plan

Ordinary Income	Capital Gains and Dividends	Single Filers	Married Filers	Heads of Household
12.2%	2.2%	$0 to $9,275	$0 to $18,550	$0 to $13,250
17.2%	2.2%	$9,275 to $37,650	$18,550 to $75,300	$13,250 to $50,400
27.2%	17.2%	$37,650 to $91,150	$75,300 to $151,900	$50,400 to $130,150
30.2%	17.2%	$91,150 to $190,150	$151,900 to $231,450	$130,150 to $210,800
35.2%	17.2%	$190,150 to $250,000	$231,450 to $250,000	$210,800 to $250,000
39.2%	39.2%	$250,000 to $500,000	$250,000 to $500,000	$250,000 to $500,000
45.2%	45.2%	$500,000 to $2,000,000	$500,000 to $2,000,000	$500,000 to $2,000,000
50.2%	50.2%	$2,000,000 to $10,000,000	$2,000,000 to $10,000,000	$2,000,000 to $10,000,000
54.2%	54.2%	$10,000,000 and up	$10,000,000 and up	$10,000,000 and up

Note: The bracket thresholds above are based on 2016 parameters.

• Eliminates the alternative minimum tax.
• Eliminates the personal exemption phase-out (PEP) and the Pease limitation on itemized deductions.
• Limits the value of additional itemized deductions to 28 percent for households with income over $250,000.

Payroll Tax Changes

• Creates a new 6.2 percent employer-side payroll tax on all wages and salaries. This is referred to by the campaign as an “income-based health care premium paid by employers.”
• Creates a 0.2 percent employer-side payroll tax and 0.2 percent employee-side payroll tax, to fund a new family and medical leave trust fund.
• Applies the Social Security payroll tax to earnings over $250,000, a threshold which is not indexed for wage inflation.

Business Income Tax Changes

• Eliminates several business tax provisions involving oil, gas, and coal companies.
• Ends the deferral of income from controlled foreign subsidiaries.*
• Changes several international tax rules to curb corporate inversions and limit use of the foreign tax credit.*

Estate Tax Changes

• Decreases the estate tax exclusion from $5.4 million to $3.5 million.
• Raises the estate tax rate from 40 percent to a set of rates ranging between 45 percent and 65 percent.
• Changes several estate tax rules involving asset valuation, family trusts, gift taxes, and farmland and conservation easements.*

Other Changes

• Creates a financial transactions tax on the value of stocks, bonds, derivatives, and other financial assets traded by U.S. persons. The rate of the tax ranges from 0.005 percent to 0.5 percent, depending on the type of asset.*
• Limits like-kind exchanges of property to $1 million per taxpayer per year and prohibits the use of like-kind exchanges for art and collectibles.*

Note: The asterisks (*) indicate provisions that were not modeled. For more information, see Modeling Notes, below.

Economic Impact

According to the Tax Foundation’s Taxes and Growth Model, Senator Bernie Sanders’s tax plan would reduce the economy’s size by 9.5 percent in the long run. The plan would lead to 4.3 percent lower wages, an 18.6 percent smaller capital stock, and 6.0 million fewer full-time equivalent jobs. The smaller economy results from higher marginal tax rates on capital and labor income.

Economic Impact of Senator Sanders's Tax Reform Proposals

GDP	-9.5%
Capital Investment	-18.6%
Wage Rate	-4.3%
Full-time Equivalent Jobs (in thousands)	-5,973

Source: Tax Foundation Taxes and Growth Model, October 2015.

Revenue Impact

Overall, the plan would increase federal revenue on a static basis by $13.6 trillion over the next 10 years. Most of the revenue gain is due to increased payroll tax revenue, which we project to raise approximately $8.3 trillion over the next decade. The changes to the individual income tax will raise an additional $4.9 trillion over the next decade. The remaining $350 billion would be raised through increased estate taxes and taxes on corporations.

If we account for the economic impact of the plan, it would end up raising $9.8 trillion over the next decade. The smaller economy would reduce wages and investment income, which would narrow the revenue gain from the income tax changes to $2.8 trillion and the revenue gain from the payroll tax changes to $7.0 trillion.

Tax	Static Revenue Impact (2016-2025)	Dynamic Revenue Impact (2016-2025)
Individual Income Taxes	$4,931	$2,759
Payroll Taxes	$8,293	$7,023
Corporate Income Taxes	$62	-$56
Excise Taxes	$0	-$65
Estate and Gift Taxes	$288	$243
Other Revenue	$0	-$76
Total	$13,574	$9,827

Note: Individual items may not sum to the total due to rounding.
Source: Tax Foundation Taxes and Growth Model, October 2015.

The largest sources of revenue in the plan are the new “health care premiums”: a 6.2 percent employer-side payroll tax and a 2.2 percent increase in the individual income tax. Together, these provisions would raise $6.6 trillion over 10 years, or $5.2 trillion after accounting for economic effects.

Another significant source of revenue for the Sanders plan has to do with the tax treatment of health insurance. Currently, households are not required to pay taxes on the value of health insurance they receive from their employers, which leads to over $300 billion a year in reduced federal revenue.[2] However, the Sanders plan would put an end to nearly all privately-provided insurance. As a result, employers would cease to compensate their employees with health insurance and would instead increase their wages and salaries by the value of the health insurance plans they used to provide.[3] These higher wages and salaries would then be subject to income and payroll taxes, causing federal tax revenues to increase by $3.6 trillion over the next decade, or $3.3 trillion after accounting for economic effects.

The components of the plan aimed specifically at increasing taxes on high-income households (partially removing the Social Security payroll tax cap, adding four new income tax brackets, and taxing capital gains and dividends at ordinary income rates) would increase federal revenue by $2.9 trillion on a static basis and $1.4 trillion after accounting for economic effects.

...

Conclusion

Senator Bernie Sanders would enact a number of tax policies that would raise tax revenue over the next decade. Together, his proposals would significantly expand federal revenue collections by $13.6 trillion on a static basis, driven mostly by broad-based taxes on income and payroll. If enacted, the Sanders plan would significantly increase marginal tax rates on capital and labor income, which would result in a substantial reduction of the size of the U.S. economy in the long run. This would decrease the revenue that the new tax policies would ultimately collect to $9.8 trillion. Senator Sanders’s plan would decrease after-tax incomes for taxpayers at all income levels, but especially high-income taxpayers.

[alucard13mm]

Next thing is grad school should be free... med school should be free. law school should be free.

It demeans the degree. Universities are already degree factories... do we really need to have more damn kids going to college even though it might not be right for them?

$#@!, if they do have free college.. only give it to those that go into STEM fields like math, sciences, engineering, medical. $#@! like gender studies, african american studies, and art should not be covered.

[Suzanimal]

Where's my free $#@!?

[rg17]

Oh $#@!! Sanders tax plan is terrifying!

[01000110]

[otherone]

Where's my free $#@!?

Speaking of which, The underclass has been buoyed by earned income credit for the 25 years. Will Bernie continue it?

[Suzanimal]

Speaking of which, The underclass has been buoyed by earned income credit for the 25 years. Will Bernie continue it?

I'm not sure. They mention deductions and credits in this article but they aren't specific.

Here's what the tax code would look like if Bernie Sanders got everything he wanted

And for every plan, he's got an idea to pay for it. College? Slap a financial transactions tax on Wall Street. Infrastructure? Tax corporations on profits they earn abroad. Single-payer? Raise income and payroll taxes, and then a bunch of others too.

While Sanders tends to portray these as separate ideas with separate financing, I thought it'd be worth adding them up and seeing what the tax code looks like with all of them. I looked specifically at his changes to personal income, payroll, and capital gains tax rates.

That leaves out the financial transactions tax, his carbon tax plan, the elimination of many corporate tax breaks he proposes, and so forth. And, of course, it's highly unlikely that everything Sanders is proposing would be passed in its current form should he be elected president, especially with a Republican House. But the combined rates nonetheless give a sense of the scale of change he's calling for.





http://www.vox.com/2016/1/22/1081479...ders-tax-rates

[rg17]

Can anybody make an comparison of Rand Paul tax plan and Bernie Sanders tax plan?

[Feeding the Abscess]

LOL people making 75k are going to be paying a higher rate than those making 118k, 152k, and 231k? LOL

[Miss Annie]

Socialists gonna Communist.

[Warrior_of_Freedom]

Why does everyone seem to neglect one of the worst taxes of them all? Property tax in some states can reach 10k+ a year, for the privilege of having a home.

[Cabal]

Why does everyone seem to neglect one of the worst taxes of them all? Property tax in some states can reach 10k+ a year, for the privilege of having a home.

Property tax is a local tax, not a federal tax. So, in the context of a presidential election cycle, where taxation, budget, deficit, and debt are being discussed, it isn't relevant.

[Suzanimal]

Feel The Bern: Sanders’ Tax Plan Would Kill 6 Million Jobs

Sanders’ plan to raise taxes by $13.6 trillion over the next decade would have a devastating effect on the economy, according to a detailed analysis released on Thursday by the Tax Foundation.

The analysis concludes his myriad tax hikes would cut GDP growth by 9.5%, reduce the nation’s capital stock by 18.6% and result in 6 million fewer full-time equivalent jobs.

“Sanders’ plan would significantly increase marginal tax rates on capital and labor income,” authors Alan Cole and Scott Greenberg say, “which would result in a substantial reduction of the size of the U.S. economy in the long run.”

After accounting for the economic harm done by Sanders’ tax hikes, the Tax Foundation figures that it will end up producing 28% less actual revenue than advertised over 10 years.

While Sanders has focused his campaign almost exclusively on wealth redistribution and attacks on the rich, his tax plan would hit everyone who pays taxes.

Sanders’ proposal includes a 2.2% surcharge on every tax bracket, effectively raising the 10% bracket to 12.2%, the 15% bracket to 17.2%, and so on. He also wants to add four new tax brackets that reach as high as 54.2%. He’d tax capital gains and dividends as ordinary income, substantially raising them for most investors.

In addition, Sanders proposes a new 6.2% payroll tax paid by employers to help finance his “Medicare for all” plan, plus another 0.4% payroll tax split between workers and employers to fund a “family and medical leave trust fund.” He would remove the income cap on Social Security payroll taxes on incomes over $250,000.

The Tax Foundation figures that Sanders would reduce after-tax income for the bottom half of taxpayers by “at least 4.87%” and the top half of taxpayers by “at least 8.57%.”

In addition, Sanders wants to eliminate tax deductions used by oil, gas and coal industries, add a financial transactions tax on the value of stocks, bonds and other financial assets traded in the U.S., and raise the estate tax rate while lowering the exclusion.

The Tax Foundation estimates that the bulk of the $13.6 trillion in revenues would come from the income tax hike, which would cost taxpayers $4.9 trillion, and the payroll tax hikes, which would cost individuals and businesses a total of $8.3 trillion.

The entire analysis is available at the Tax Foundation website.

http://www.investors.com/politics/ca...jobs-analysis/

[FrancisMarion]

The two tax analysis conflict each other.

Which one is reliable?

Either one will absolutely crucify small business. Who would want to start up anything under these burdens? I see prices of services and goods rising (not even including min wage variable). More consolidation of business that can afford these burdens. So much for buying local.

[TheNewYorker]

It doesn't matter, president doesn't have authority to change the tax code.

[Suzanimal]

Report: Sanders proposes $15T in tax increases, hitting most taxpayers

...

“Bernie Sanders is very open about raising taxes on everybody, with the argument that people at all income levels are going to be benefiting from the new spending programs that he’s proposing,” Burman said.

..

Sanders wants tax hikes to pay for a raft of new government benefits, including health care for everyone, free college tuition, paid family and medical leave, and increased infrastructure spending.

There is a risk that Sanders’s tax increases won’t be enough to cover all the additional spending, worsening the government’s already dire long-term budget outlook, the TPC said, though it didn’t examine that question in detail.

Nor did it examine whether, for some taxpayers, the value of Sanders’s new government benefits would outstrip the cost of his tax increases.

“We do not account for the effects of the new government programs on income,” said Burman. “We focused on the tax side, and we’re not really experts on the spending component.”

It is unfair and misleading to exclude those benefits, said Warren Gunnels, Sanders's policy director.

"Bernie's tax plan is the mechanism for achieving universal health care, creating jobs and a secure retirement," said Gunnels. "Without estimating the benefits the American people would gain under these initiatives, the Tax Policy Center's report is inaccurate and one-sided."

The report underscores how Sanders is a rare presidential candidate in either party who is willing to spell out in detail how he’d finance his legislative agenda. By contrast, the Republican candidates have proposed tax-reform plans that would cost trillions, saying they would be financed by thus-far unspecified spending cuts and economic growth.

In all, Sanders has proposed more than two dozen separate tax increases, the report shows, and in every major class of taxes.

He’s called for multiple increases in the income taxes paid by individual Americans that would push the top rate to 54 percent, from the current 39.6 percent.

At the same time, Sanders would create and expand payroll taxes. He's proposed a new 6.2 percent tax on employers as well as an additional 0.2 percent payroll tax on both employers and their workers. He would also apply the current 12.4 percent Social Security tax to incomes over $250,000.

Corporate taxes would go up, mostly by going after multinational corporations using accounting maneuvers to slice their tax bills. Sanders would end so-called deferral, which allows companies to postpone paying taxes on overseas profits; target tax-advantaged corporate inversions; and place new limits on the credits companies receive for paying taxes in other countries.

Sanders would almost triple capital gains taxes to 64 percent, a level unseen since World War I. At the same time, he would shut off ways the wealthy have long used to avoid paying the tax, such as “stepped up basis at death,” which allows them to pass assets onto heirs tax free.

And he would create two big new excise taxes, including a carbon tax, the first time that’s been proposed by a major presidential candidate.

Sanders would charge $15 per ton of carbon dioxide emissions in 2017, with the fee ramping up to $73 per ton by 2035. That would raise $900 billion over the next decade, after accounting for rebates he would give to middle- and low-income people who presumably would be hit with higher energy prices, the Tax Policy Center said.

He would also create a new financial transaction tax that would charge 0.5 percent on stock sales. That would produce an additional $692 billion, according to the analysis.

The top 1 percent of earners would bear 38 percent of the total tax increase proposed by Sanders, according to the analysis, while those in the top fifth of incomes would pay 68 percent of his levies.

That top quintile, which includes those earning more than $142,000, would see its taxes go up by an average $44,759. Those at the very bottom of the income ladder would see their taxes go up by $165 while those in the second quintile of incomes — between $23,000 and $45,000 — would pay an additional $1,625.

Many of Sanders's tax increases are so big and novel that it tested the ability of the Tax Policy Center to predict their likely effects.
“It was a difficult estimating task,” said Frank Sammartino, a senior fellow at the group. “For changes of this magnitude, we’re really going into unknown territory."

Read more: http://www.politico.com/story/2016/0...#ixzz41zJcPITy

[rg17]

Report: Sanders proposes $15T in tax increases, hitting most taxpayers




Read more: http://www.politico.com/story/2016/0...#ixzz41zJcPITy

[TheTexan]

But just think how awesome our roads would be

[r3volution 3.0]

Can anybody make an comparison of Rand Paul tax plan and Bernie Sanders tax plan?

Some highlights:

Bernie's plan raises payroll taxes for everyone; Rand's plan eliminates payroll taxes altogether.

Bernie's plan raises income tax for everyone; Rand's plan cuts income tax for everyone.

On a static basis, Bernie's plan would raise taxes by $1.36 trillion per year on average over the next 10 years, while Rand's would cut $180 billion per year.

Bernie's plan is estimated to reduce GDP by 9.5% and destroy 6 million jobs; Rand's plan is estimated to increase GDP by 12.9% and create 4.3 million jobs.

[rg17]

Some highlights:

Bernie's plan raises payroll taxes for everyone; Rand's plan eliminates payroll taxes altogether.

Bernie's plan raises income tax for everyone; Rand's plan cuts income tax for everyone.

On a static basis, Bernie's plan would raise taxes by $1.36 trillion per year on average over the next 10 years, while Rand's would cut $180 billion per year.

Bernie's plan is estimated to reduce GDP by 9.5% and destroy 6 million jobs; Rand's plan is estimated to increase GDP by 12.9% and create 4.3 million jobs.

Bernie is a very scary man!

[Philhelm]

Next thing is grad school should be free... med school should be free. law school should be free.

It demeans the degree. Universities are already degree factories... do we really need to have more damn kids going to college even though it might not be right for them?

$#@!, if they do have free college.. only give it to those that go into STEM fields like math, sciences, engineering, medical. $#@! like gender studies, african american studies, and art should not be covered.

This is tangential, and I don't disagree with your overall sentiment, but there seems to be a rising trend against anything that is non-STEM. Usually such sentiments are presented as a false dichotomy, as though the choice is either STEM or basket-weaving. Frankly, the world would be a $#@!ty place if everyone only pursued STEM professions. Roughly fifty percent of the garbage posted online by native English speakers seems to be written by semi-literate people. Maybe we need more English degrees after all (and don't get me started on the people who think that we defeated the Nazis in WWI).

[muh_roads]

LOL people making 75k are going to be paying a higher rate than those making 118k, 152k, and 231k? LOL

Even before Bernie, it appears to have been always like that. I guess I wasn't paying attention. The 18K & 75K groups are getting screwed.

[Feeding the Abscess]

Even before Bernie, it appears to have been always like that. I guess I wasn't paying attention. The 18K & 75K groups are getting screwed.

Did not know that. I was also not paying attention, apparently.