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Bernie Sanders’s Tax Plan Would Test an Economic Hypothesis

• lintiness 11y ago
  there's a fundamental flaw in the reasoning: if single payer healthcare plans save money, why do we need higher tax rates?
  • atroyn 11y ago
    Because the increase in taxes would be more than offset by savings in other areas?
  • furyg3 11y ago
    Because the payer changes? Maybe I don't understand your question...
  • gotothrowaway 11y ago
    To cover the currently uninsured/underinsured, I imagine.
    • ctdonath 11y ago
      That's what the current "Obamacare" plan was supposed to solve. After thrusting much of the health system firmly under government control, raising costs substantially, and literally fining people for being unable to afford more expensive plans, we're left with ... the same number of un- & under-insured people.
      • daeken 11y ago
        > we're left with ... the same number of un- & under-insured people. No, we're not. "Gallup reported in July 2014 that the uninsured rate among adults 18 and over fell from 18.0% in Q3 2013 to 13.4% by Q2 2014." More Americans are insured today than ever before, both in absolute numbers and as a percentage of the population. This doesn't mean that the ACA is responsible, but saying that we have the same number of under/uninsured people is simply false.
      • delecti 11y ago
        > we're left with ... the same number of un- & under-insured people That's untrue. http://www.gallup.com/poll/182348/uninsured-rate-dips-first-quarter.aspx http://www.gallup.com/poll/182348/uninsured-rate-dips-first-...
      • clavalle 11y ago
        The uninsured rate has been cut in half under Obamacare. >According to an ongoing NHIS / CDC study the current uninsured rate of 9.2% for 2015 is the lowest in over 50 years. It started at 18%.
      • mhalle 11y ago
        > After thrusting much of the health system firmly under government control, Everyone outside of Medicare is in private insurance, which is regulated but not "firmly under government control". > raising costs substantially, While there is debate about whether the ACA has slowed the rate of healthcare inflation in its short life, there is no evidence that it has "raised costs substantially" across the system. > literally fining people for being unable to afford more expensive plans Fining people for choosing not to pay for health care if they are able. Everyone needs health care, most everyone gets (possibly lacking) healthcare when they need it, and it costs money. The previous solution, brought to you by Ronald Reagan, was the mandate that hospital emergency rooms couldn't turn people away who needed help. A humane concept, but poor social or economic policy for addressing the healthcare system in the large.
      • dragonwriter 11y ago
        > That's what the current "Obamacare" plan was supposed to solve. And it reduce the problem considerably (though less than it would have without the bizarre Supreme Court decision that Congress can't actually set the terms on which states get federal Medicaid funds, and particularly change the rules on Medicaid to require states accepting federal money to expand coverage -- which resulted in a number of states opting out of the expansion in Medicaid coverage that was intended to cover the lowest-income portion of the uninsured population not already covered by Medicaid -- the higher-income segment was addressed by the exchange-and-subsidy system.) > After thrusting much of the health system firmly under government control, raising costs substantially, and literally fining people for being unable to afford more expensive plans, we're left with ... the same number of un- & under-insured people. Actually, a much smaller number, but still more than many people would like.
  • fisherjeff 11y ago
    I think think the idea is that the burden of a higher tax will be lower than that of a lower tax rate plus private insurance.
  • jeffmk 11y ago
    Your taxes may go up, but the claim is that the amount your taxes go up will cost less than the healthcare premiums/out-of-pockets/copays/prescriptions/etc. you have to pay, thus the average individual's net cost for healthcare is lower.
  • dmm 11y ago
    In a single payer system the govt is the only one who pays for healthcare. That means even if healthcare spending is the same or less, the portion of healthcare paid for by the govt increases greatly, requiring higher taxes.
    • ctdonath 11y ago
      Medicaid & Medicare are practically "single payer" government-monopoly health insurance plans. They're notorious for severely under-paying doctors et al, to the point that many refuse to take such patients at all.
      • pgeorgi 11y ago
        Good luck trying to pick the highest bidder when all your potential patients are in the same single payer scheme.
      • dmm 11y ago
        I have no opinion on healthcare funding. I was just explaining how a lower total cost could still result in greater govt spending and taxes.
  • avar 11y ago
    Let's say you make $1000 taxed at 20%, so you have $800 take-home. You spend $400 of that on health insurance. Now you have $400 left, or 40% of the initial amount with a 60% effective "tax" rate. If your taxes increase to say 40% but health insurance is included your taxes have nominally gone up 20%, but down 20% if you consider non-tax costs that were folded into your taxes. As anyone who's moved between countries can tell you, it doesn't make any sense to just consider what the tax rate is, instead you have to think about fixed costs (health care, housing, food, transportation, ...), deduct that from your pre-tax pay, and you're left with your effective taxation as it were. Administrative changes in the government can increase your taxes but have the effect of increasing your take-home pay, that's effectively what Sanders is proposing. There's no flaw in this reasoning, on the contrary you seem to have the fundamental flaw in your reasoning of assuming that the only way for the government to save you money is to reduce your tax rate.
  • chumich1 11y ago
    The savings comes from no longer paying for private insurance which is currently extremely expensive
  • Spooky23 11y ago
    The single payer is the taxpayer vs. the current model where you have a split between rate-payers and employer/medicare/medicaid.
  • clavalle 11y ago
    People who are paying insurance premiums and taxes currently put money in two areas we'll call 'insurance' and 'tax' for convenience sake (and because it accurately reflects reality). The money in the 'insurance' area goes toward paying private medical costs. If those private medical costs disappear and are shifted to public costs under a single payer plan, they don't go away, merely move under that other column. From then on, no money need be put into the 'insurance' area. Yay! But now, the 'tax' area has to pay out more since it took on those costs so much of the money that would have been put in the 'insurance' area must be put over in the 'tax' area to cover the medical costs that have not disappeared but been recatagorized in terms of what pool it is paid out of. Even if those private medical costs are halved somehow, saving the payee money in the process, the 'tax' area would still need to be bolstered to handle the additional burden. Thus, higher taxes even though overall money is saved.
    • sharemywin 11y ago
      I read somewhere that insurance company profits are the things you save in a single payer system. insurance "expenses" would be shifted to government expenses.
      • clavalle 11y ago
        There are all kinds of savings in a single payer system. You eliminate the overhead of dealing with disparate billing systems. You can more easily find waste and fraud since all data is flowing into one place in a single comparable format. And, most importantly, you have the power of being the only buyer in a market which can pretty much dictate what price they will pay as long as it doesn't drive the providers directly out of business. But it is disingenuous for OP to suggest that because taxes go up it is an overall worse situation for those paying those taxes, implying there is no way they would save money.
  • adventured 11y ago
    There's a very simple answer: the middle class pays very low income taxes in America. Nearly all of the income tax burden is on the top 25%. If you want to shuttle over half the population into a new single payer health insurance system, they're almost all going to be a (big) net drain. It's an inherent consequence of a highly progressive tax system. Your typical middle class single person is now spending $300 to $400 per month on health insurance (employer sponsored is closer to $100 per month, but that's merely subsidization), and you want to shift them into single payer, then you have to recover that $300 to $400 via taxation. The median in the US has an effective income tax of about 3% to 5%. Put another way, putting all of that toward their new single payer insurance, wouldn't come close to covering how much they'll cost you (and that's before getting into family cost structures).
    • kefka 11y ago
      > the middle class pays very low income taxes in America Citation needed. There's "fees", "taxes" and all sorts of hidden ways that eat into the middle class. Not only that, but how much "Fees" were in the eggs you bought? None, right? Not really: they're just bundled in and hidden. Ever get a speeding ticket? That's a fucking tax. Property tax, car "license plates" - tax. Gas has taxes, and a lot of them. As does alcohol. And then there's sales tax- just because you sold something. Hell, there's taxes for dying. But myopically, it looks small. I'd wager that these 'little bits' here and there by far exceeds the percent paid in taxes than the top 1%.. and we know it hurts the middle class far worse.
      • refurb 11y ago
        The top 10% (over $125K/yr) pay 70% of all income tax in the US. In 1990, it was 55%.[1] [1]http://www.ntu.org/foundation/page/who-pays-income-taxes http://www.ntu.org/foundation/page/who-pays-income-taxes
        • kefka 11y ago
          But they at most work with IRS numbers regarding federal income tax. Lets be real here: any money that's leaving my pocket that goes towards "compliance", "fees", "fines", "tickets", or what have you is Tax. Now, I don't have a problem with tax itself (as a concept). I get that services need to be paid for, and that's us. But what I want to know, is out of my paycheck, how much really is taxed? No one can answer that.
• jljljl 11y ago
  If the high tax rate only applies to ordinary income, won't this just shift compensation away from ordinary income and towards stock-based or alternative compensation?
  • paulmd 11y ago
    It's already advantageous to structure your earnings in this way, so most high earners are already doing this as much as is possible.
  • ansy 11y ago
    Yes. In fact anyone earning that much has already shifted away from ordinary income. Famously, this is what Warren Buffet does to pay a lower tax rate than his secretary. The solution is taxing capital gains the same as ordinary income. The next level beyond that is to shift earnings into personal corporations which are taxed at a corporate tax rate and enjoy other protections. This is like what Zuckerburg recently did. The final dodge is to move earnings overseas much like most corporations do today. With enough money there are always loop holes to exploit. I'm in favor of closing as many as possible. If there's someone out there rich enough to found their own sovereign nation in the Pacific, there's not much we can do about that.
  • pnathan 11y ago
    Yes. The Company will begin to provide these extra perks to high income earners, solely in order to advance the Company's efficiency. Perks may include: private jet, a house near the office (or far away), fully paid for meals, etc.
• clavalle 11y ago
  I am a Sander's supporter so I say this more theoretically than as a criticism of his plan: It scares me that in our political structure that we feel like we need to experiment with the whole country. I understand that if we don't the super high income earners, in this case, would flee to cheaper areas but I sure prefer the idea of trying out large shifts in policy in more gradually widening areas than completely wholesale as we've been doing. On a related note, what are the good software platforms for running economic simulations? Are any of them decent?
  • knodi123 11y ago
    It's an experimental return to the tax rates we used to have back in the 40s and 50s, before the massive tax cuts that started being implemented a couple of decades later.
  • seivan 11y ago
    What about comparing to other countries and their tries? I am sure there are some slight variation and cultural differences, but it's a good start. On the same note, I am amazed how many mistakes Europe is doing when the answer sheet is just look at what LKY did.
  • grecy 11y ago
    > It scares me that in our political structure that we feel like we need to experiment with the whole country How else do you expect to improve anything? You have to try something, and many, many other countries have tax structures close to this, so you know it's not going to fail.
  • notthegov 11y ago
    Federalism.
    • vezzy-fnord 11y ago
      In practice, a marble cake federalism.
  • agentgt 11y ago
• tyingq 11y ago
  "Mr. Sanders...proposed a...top tax rate of 52 percent...When you combine it with other taxes that apply to income...it would add up to a combined tax rate of over 73 percent" I'm trying to imagine the scenario under which this would get through Congress unscathed.
  • dragonwriter 11y ago
    The scenario is this "the idea is aggressively sold during the campaign, and is a key issue in not only the Presidential election but a substantial number of Congressional elections". Of course, even if Sanders is elected, its likely that there won't be sufficient support to.adopt his programs unmodified in Congress, and some alternative or compromise will be necessary. The same is true, for that matter, of any Presidential candidate. Part of why you campaign on plans is to shift the public dialogue and set the groupies ds for the eventual compromises that are necessary as part of governing when you aren't a dictator. Holding back preemptively doesn't help that, it just cedes ground to the other side before the work of compromise starts.
    • tyingq 11y ago
      >> is a key issue in not only the Presidential election but a substantial number of Congressional elections Are there a substantial number of Democratic congresspersons that would line up behind Bernie's tax proposals? Edit: Yes, I get how it works. There's a point, though, where reaching too far is counterproductive.
      • dragonwriter 11y ago
        The key question is "will their be in 2017"; there is an election for 100% of the House and 1/3 of the Senate at the same time as the Presidential election, and the policy proposals of the Presidential nominees of the various parties are likely to be salient issues in each of those elections.
  • dllthomas 11y ago
    Combined top marginal tax rate, yes?
• grecy 11y ago
  A hypothesis that has been tested and proven in many countries around the world for decades. Not long ago my Dad was paying 50% income tax on ~$75k+ AUD. We had a nice upper-middle class life, no worries.
  • knodi123 11y ago
    In america, in 1948, the marginal tax rate on income over 200,000 was 91%. The 50% tax rate was on income over $16k. Which is $157k in 2015 dollars.
    • harryh 11y ago
      Corporations responded by not paying high salaries but instead giving people lavish expense accounts and company cars that were not taxed.
      • eplanit 11y ago
        Yes. And, the tax code was filled with so-called loopholes. Anybody with a brain and a competent accountant were able to cleverly avoid a lot. Many of these were eliminated in the Reagan-era "tax reform" (and more since).
      • deleted 11y ago
        [deleted]
  • merpnderp 11y ago
    But I'd hate to give up all these top rated hospitals. The US has more expensive health care, but the US also has most of the best hospitals. http://hospitals.webometrics.info/en/world http://hospitals.webometrics.info/en/world
    • grecy 11y ago
      Too bad tens (hundreds?) of millions of citizens can't afford to go there.
• chris_va 11y ago
  """ Mr. Sanders has proposed a headline top tax rate of 52 percent, applying only to incomes over $10 million ... “We do not assume taxpayers change their behavior,” said Warren Gunnels, the policy director for the senator’s campaign. """ ... why? The top marginal rate before Reagan was ~50%, and was lowered to 28%. Given this logic, you would expect that the US net tax revenue would have declined significantly in this period, which it did not. Basically, money just shifted from capital gains and corporate taxes to individual returns. If we increase the marginal rate again, it will likely just shift back without changing anything.
  • momerath 11y ago
    Sanders would also seek to double the capital gains rate for the richest 2%, and close various loopholes.
    • pluckytree 11y ago
      Then it will shift somewhere else. Or being invested in countries where savings and investment are rewarded rather than punished.
    • chris_va 11y ago
      That complicates it more, and high net worth individuals will just leave their money in captive corporations/trusts instead. This is not a route to saner tax policy, just something that sounds great to the average voter.
      • toomuchtodo 11y ago
        Can the law not be modified to collect from corporations and trusts? That's my concern with this line of reasoning: Money, which is just a transfer mechanism of wealth, is a human creation, just as the rules around its taxation are. People seem to think that "If you change the rules, people will just find other ways!". Well, the rules can change at any time. > This is not a route to saner tax policy A saner tax policy taxes the wealthy at a higher rate than the middle and lower classes. Trickle down has proven not to work.
• ghouse 11y ago
  The US already tested the "trickle down" economic hypothesis.
  • merpnderp 11y ago
    The tax rates during "trickle down" were hardly much different than they've been for the last 40 years. For instance the top capital gains tax rate was set to 20%. Exactly what it is today.
  • ctdonath 11y ago
    "Trickle down" was a deliberate mischaracterization by opponents of Regan's economic plans. What it construes wasn't implemented.
    • kefka 11y ago
      Yes, and the Capitalists whom Reagan's plans helped ended up doing what with the gains? That's right. They saved it. They didn't "invest" or whatever crap was spewed then. They didn't hire more people.
• merpnderp 11y ago
  Won't this push a lot of highly payed professionals into early retirement? Doctors, lawyers, and managers, at the point in their careers where they are the most experienced and capable, will likely decide in meaningful numbers it is no longer worth putting in the hours if they only get to keep 27% of what they earned.
  • frandroid 11y ago
    How many of these people make over $10M a year? Also, even if they do, they wouldn't be taxes that high on the first $10M.
  • vnchr 11y ago
    If so, that might improve the job prospects of many up and comers in those fields. I think your point is clear that there's potential for loss because of the retiring talent, but that can incentivize investing in talent down the pipeline.
    • ameister14 11y ago
      There aren't enough qualified doctors for our population as it is.
  • vorotato 11y ago
    Good, more room for the next generation.
    • rglullis 11y ago
      I don't know what is worse: the ageism you are showing or the mentality of an 18th century economist.
    • pluckytree 11y ago
      To learn from whom?
      • toomuchtodo 11y ago
• mc32 11y ago
  As most middling earners, I'd support taxing people at extraordinary incomes, but at the same time, I don't think it's prudent to shock the economy with such a thing. Gradual does it, also work with other OECDs so that you have framework whereby you don't have people becoming Russian residents for the purposes of evading extraordinary taxes, thus defeating the whole purpose of the hikes.
  • brbsix 11y ago
    The U.S. taxes citizens on worldwide income, so becoming a Russian resident is not likely to help. There is also a significant expatriation tax for those wishing to renounce their citizenship. I suppose you could move to Puerto Rico or expatriate well in advance of any expected earnings. However you're absolutely correct that there are unfathomable unseen costs and effects.
• mrfusion 11y ago
  Maybe we should move into doing a luxory sales tax instead? 100% sales tax on yatches and cars over 100k? 20% tax on homes over one million?
  • mrfusion 11y ago
    People might also be more supportive of taxing things they'd never dream of buying.
    • wnevets 11y ago
      Unlikely, a lot of americans believe they'll be rich soon.
  • merpnderp 11y ago
    A tax on consumption? Why that would encourage people to save for the future. Blasphemy in modern economics where negative interest rates are being contemplated to further discourage savings.
• SN76477 11y ago
  I think Sanders has radical ideas that will not work in America... I also support him for this reason. We do not need to be the next Norway, but we should have much better healthcare, education and intolerance of greed. I think that his fresh ideas will really bring this to fruition.
  • cmrdporcupine 11y ago
    He is running a propagandistic campaign that seems to be more about 'bending the stick' of public perception of what is mainstream political/economic thinking in North America. And I think that is good and I wish him well. But for myself, as someone who would call himself a kind of Marxian socialist, I wish he'd stop calling himself a socialist. He is doing both himself (at best a Euro-style social democrat) and socialism a disservice.
    • ph0rque 11y ago
      'bending the stick' of public perception I prefer the term "opening the Overton window". (https://en.wikipedia.org/wiki/Overton_window https://en.wikipedia.org/wiki/Overton_window)
    • vezzy-fnord 11y ago
      He might count as a Fabian, so I don't think the "socialist" label is necessarily inaccurate. It's a very diverse set of ideas.
  • wernercd 11y ago
    > We should have much better healthcare, education and intolerance of greed And, isn't that what our current "Hope and Change" was supposed to bring? Just what we need... another 4/8 years of ineffectual leadership that changes nothing because this will cause nothing but gridlock.
  • jamiequint 11y ago
    Why do we need less 'greed' (if you can even define that)? Is that quantitatively better for the country in some way? If so, how?
• ctdonath 11y ago
  Being halfway thru reading "Atlas Shrugged", I find it bewildering that on a site devoted to promoting the best of capitalistic productivity, so many posters adhere to compulsory redistribution of wealth confiscated from the productive.
  • talideon 11y ago
    It's 'Hacker News', not 'Objectivist News'.
    • ctdonath 11y ago
      It's a branch of Y-Combinator, funding startups with the expectations of high rewards for high risk & effort without strangers confiscating some 75% of profits. It's the discussion forum for real-world objectivism in action.
      • ForHackernews 11y ago
        What "high risk"? Y-Combinator invests a very small amount of money from extremely wealthy people. It's "high risk" in the same way your buying a lotto ticket might be termed "high risk".
        • nightski 11y ago
          High risk in the sense that companies founded by Y-Combinator are focused on raising a lot of capital to feed extremely fast growth. This is not slow healthy growth. From Y-combinator's perspective they are fine since a.) initial investment is low and b.) extreme diversification. But the companies themselves can be very volatile and risky.
          • braythwayt 11y ago
            However, although their are obviously exceptions, YCombinator typically invests in founders who don’t have a ton of financial skin in the game. Which founders have kids that won’t eat if the company fails? If you aren’t looking at being thrown out of the family home, you aren’t really taking on a huge amount of risk. The typical thing at stake for most founders is opportunity cost: “With my grades and experience, I could have been making $200,000 - $300,000 consulting or at BigCo, but I chose to found a startup instead."
• ck2 11y ago
  I love his spirit but absolutely nothing Bernie is selling can pass Congress which means absolutely nothing will change if he is elected. You really think he could survive running for re-election at 80 years old? Anyone old enough to remember Reagan will know what happens to people that old in the white house. Not crazy about Hillary but I could live with her. If Trump is elected, I'm somehow moving to Canada, not because of him, because of the 51% of people who elected him and having to live with them after surviving Bush.
• djb_hackernews 11y ago
  I am a Bernie supporter, but I have 2 issues: 1) I'm having a hard time understanding how such a policy shift could happen purely from the POTUS 2) Even if it did happen and we got single payer, I have a feeling it'd just turn in to another benefit for the employer. When employers no longer provide health insurance they'll just keep the money for themselves and the employees won't see the actual benefit, just the higher taxes. If my employer is currently paying 13k/yr for family coverage and all of a sudden doesn't have to, I doubt they'll be adding that, or even some percentage, to my salary.
  • kefka 11y ago
    Unfortunately, my founded belief is that if a Democrat gets elected president, the gang of Republicans that shut down government will also act to stop any action the D-President does. We've already seen this with Obama. It's not hard to see them doing more of the same.
    • enraged_camel 11y ago
      Bernie may be a democratic socialist, but he has decades of experience bringing together both sides of the aisle to pass legislation. His opponents may not agree with him, but they respect him. In contrast, Hillary is pretty much universally hated among Republicans. In my opinion she has a much lower chance of getting anything done if elected.
      • heimatau 11y ago
        What evidence do you have to support Bernie could bridge the gap better than Hillary? When they were both in the Senate they voted 93% similarly. In addition, Bernie is liberal/progressive (far left) and Hillary is more moderate/liberal. On the spectrum, Hillary's politics are closer to Repubs than Bernie is. And Hillary is essentially a Bill Clinton in ideology, which is someone who enact legislation that's a hybrid of dem/reb lib/consv ideologies.
    • harryh 11y ago
      It's worth noting that any tax increase has to start as a bill in congress, so it wouldn't so much be Republicans stopping the action of a D-President as just not doing what he/she wants them to do. Which...sounds like how the system is supposed to work? Checks & balances and all...
• jandrewrogers 11y ago
  High income tax rates do not "discourage greed", they merely cause it to manifest in different ways. Compensation structures in high tax jurisdictions like Europe reflect this, with myriad forms of lavish compensation for corporate executives that are technically not income, much more so than in locales where the taxes encourage people to simply write a check. An argument could be made that direct cash compensation in tax jurisdictions where that makes sense has the benefit of being a much more transparent kind of compensation. Tax rates don't change human nature, they merely change incentives.
• misiti3780 11y ago
  This might work in other countries but I am skeptical it would work in the united states. I do like sanders ideas of reforming wall street: https://berniesanders.com/issues/reforming-wall-street/ https://berniesanders.com/issues/reforming-wall-street/ If he gets elected and can actually deliver on that promise, hopefully he can manage to siphoned off enough tax base from wall street alone to fund some of his other ideas.
• JDiculous 11y ago
  It bothers me that our politicians always talk about taxing labor income but never talk about taxing land values and/or capital. We need more economists coming up with tax plans rather than politicians. (I say this as someone who will vote for Bernie Sanders)
  • hnal943 11y ago
    That's a real problem. Wealth and income are radically different numbers for people at the top end. High income taxes end up punishing the upper middle class instead of the truly wealthy who own assets.
• ohitsdom 11y ago
  This would be devastating to athletes. Take the NFL as an example. A player's earning window is very short. Once their career is over, they often suffer from health problems and lack of training to do anything else. I don't like the idea of taxing these guys at 70%+ when they're giving up their bodies for money to last them a lifetime. I know many athletes continue to get endorsements, speaking fees, and other income after their playing days are over. But that is only really significant money for the stars, and continues to decline as they age. Obviously pro athletes are a very small percentage of the population, but it's still interesting to consider how this impacts different professions.
  • riffraff 11y ago
    there are athletes in less profitable sports than NFL (or leagues, or teams), their careers also don't generally last long but they still do it.
  • jacobolus 11y ago
    The status quo is devastating for the vast majority of aspiring athletes. It’s only a tiny fraction who come out ahead.
  • harryh 11y ago
    It's not just pro-athletes who have short windows of high earnings. A lot of the so called 1% are only in that group for a small number of years. It might not be as extreme as NFL athletes but think about, say, a startup founder who takes a very low salary for 5-10 years but then has 1 great year when he cashes out.
  • fnovd 11y ago
    > they often suffer from health problems and lack of training to do anything else So do millions of Americans who did not have the chance to make millions playing sports in their twenties. A new tax plan would have the intention of making lives easier for folks struggling with low wages, ex-footballers included.
• jamiequint 11y ago
  Successful entrepreneurs often make huge lump sums when their company is acquired, usually after many years of hard work and low pay. Sanders' plan to make taxes on capital gains equal to those on ordinary income and to increase the marginal tax rate to effectively > 80% (once state taxes are included if you live in CA or NY) is effectively a wealth transfer from the most productive part of the economy (new enterprise creation) to the least productive part (government). Its a shame that we have a presidential candidate with this level of economic illiteracy that is still taken seriously by a large part of the country.
  • hfourm 11y ago
    Economics is politics, not science.
  • snowwrestler 11y ago
    Government does not hold the money, though, it redistributes it again through contracts, credits, and payments. All taxes are redistributive. If they weren't, they wouldn't need to exist--i.e. if private income is already paying for everything the country needs, there is no need to use taxes to move it around. But of course, private income is not already paying for everything the country needs. Consider a basic function of a national government: self defense. Protecting the nation benefits all citizens. But not all citizens have the same amount of wealth and income. So any taxes that pay for national defense, even if applied with one flat rate to every person, will redistribute wealth. It will confer the benefits of national defense equally on a person who paid $1 in taxes and a person who paid $1,000 in taxes. Security is a form of wealth; the $1 payer got a better deal than the $1,000 payer. So, the concept that taxes are bad if they redistribute wealth is flawed, because redistribution is the entire point of taxes. Instead, to critique tax policies, we need to be specific about the taxes and payments and outcomes.
• MrZongle2 11y ago
  Of course, this assumes Sanders even makes it to the general election. Despite his polling, the skeptic in me thinks that the Clinton campaign will be the Democratic candidate on the ticket in November....public support be damned, she's the candidate that the establishment wants.
• ojbyrne 11y ago
  As a progressive (but a highly-taxed one) I'd like to see defense spending cut by 50%+ first. That's not going to happen either.
• devinhelton 11y ago
  Even the 73% optimal tax rate proposed by Saez and Diamond is based on bogus analysis. The point of taxation is not to maximize government revenue -- if the government wants to maximize revenue it could just print dollar bills. The point is to maximize purchasing power. Thus the downside of high taxes is not manifested in lower government revenue in dollar terms. It is manifested in fewer startups and fewer risky investments, and thus fewer new technologies and new products. Overly high taxes change the equation for risk taking -- why try to start a business when if you succeed, you won't keep that much of the winnings? If fewer people start businesses, the economy becomes more sclerotic as big corporations no longer have to face competition from upstarts. The problem is that it is fundamentally impossible to quantitatively measure the impact of taxes on startups and economic dynamism. We know that if we taxed at 100%, we would likely have very few startups. But we do not know how much any given incremental change will hurt the economy. But as rough estimate, if the current tax rate is ~33%, and a tax rate of 100% would kill all startups, then a tax of 73% (the max rate proposed by Saez) would kill about half of startups (or rather, mean that they never exist. Immigrant founders would choose to start companies elsewhere, other founders would sell out early to a big company, and the big company would then just ruin the product like they normally do, etc.) Very roughly, such a tax rate might raise around an additional $100 billion. Would increasing total government revenue by 2% be worth killing half of all startups? That doesn't sound like a good trade to me. (Of course I am personally biased on this issue).
  • Someone1234 11y ago
    > why try to start a business when if you succeed, you won't keep that much of the winnings? I'd call $9.9 million or less a year pretty big "winnings" without hitting these tax thresholds. Plus the way tax brackets work mean you get a pretty big payday on the money below the top most threshold. It is completely unrealistic to claim that people won't start businesses because any personal profits they make over $10mil/year will be taxed too highly. It is completely out of touch with the financial position that most normal people are in.
    • devinhelton 11y ago
      It is completely unrealistic to claim that people won't start businesses because any personal profits they make over $10mil/year will be taxed too highly. It is completely out of touch with the financial position that most normal people are in. If the high tax rates only apply above $10 million, then the big impact would be on: 1. The most skilled global talent, who might choose to start their business elsewhere, where there would be the prospect of becoming super rich. 2. Angel investors and second-time founders. A major reason these founders would want to take risks, reinvest, and double down is to hit the home run, and have change-the-world amounts of money. 3. First-time founders who sell-out early to a big company, rather than try to go big. This could really do great damage to the pipeline of new and great products, since big companies are often where innovation goes to die. I do agree that a high percent tax rate on income over $10 million would not do much to discourage run-of-the-mill new businesses, such as restaurants and landscaping companies. But I think it could majorly discourage the types of startups which drive the continued advancement of technology.
• heimatau 11y ago
  It seems a lot of people are misinformed in this thread about Bernie's plan. Here is a quick video explaining Berine's plan to change Washington (by Robert Reich): https://www.youtube.com/watch?v=VfIhonVoFSg https://www.youtube.com/watch?v=VfIhonVoFSg tldr; Bernie wants a political revolution of voting progressives which will put new Senators/Congressmen(women) in DC, which will allow for new FDR like changes to occur.
• jpollock 11y ago
  I saw this article listing the proposed new tax brackets. http://www.fool.com/retirement/general/2016/02/07/bernie-sanders-income-tax-brackets-how-much-would.aspx http://www.fool.com/retirement/general/2016/02/07/bernie-san... Personally, I can't afford a house in the valley, and the new brackets would cost me an additional $10-15k/yr, putting home ownership out of reach for a long time. In fact, the additional $10-15k/yr would put me close to not being able to afford my rent. That's even before looking at the change to capital gains, which would tax them at the marginal rate.
• tmaly 11y ago
  I would like to see Mr Sanders proposed rates for the middle class and what range of income he deems to be middle class. Middle class in SF or NYC is much different than say Detroit, MI. Housing costs, cost of living, and local taxes are not really factored into the current federal tax rates, and higher rates on the middle class could hurt a lot of people.
• greggyb 11y ago
  Why not make it cheaper to pay taxes than to pay accountants, lawyers, and financial strategists to avoid those taxes in the first place?