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January 29, 2016
Sanders Offering Largest U.S. Tax Increases Ever, Group Says
by Paul C. Barton

Full Text Published by Tax Analysts®

If he won the presidency, Sen. Bernie Sanders, I-Vt., would bring with him the largest set of proposed tax increases in U.S. history, officials at the Tax Foundation said January 28.

The foundation's comment came in response to questions from Tax Analysts about its tabulation of Sanders's proposals so far.

The foundation's analysis said that Sanders -- who is battling former Secretary of State Hillary Clinton for the Democratic presidential nomination -- is calling for tax increases that would bring in $13.6 trillion over the next decade on a static basis and $9.8 trillion when taking into account decreased economic activity resulting from them.

Overall, the Tax Foundation said, they would cause a 9.5 percent decline in GDP over the next 10 years, with wages reduced 4.3 percent, capital stock reduced 18.6 percent, and 6 million fewer jobs.

Much of the new revenue would be used to fund his "Medicare for All" government-run health insurance plan, as well as guaranteed paid family and medical leave for workers.

"As far as I'm aware, Sanders is indeed proposing the largest set of tax increases in U.S. history," foundation analyst Scott Greenberg told Tax Analysts.

Previously, he said, the largest increase was the Revenue Act of 1942, which raised taxes by 5.04 percent of GDP.

"According to our revenue estimates, the Sanders tax plan would raise federal taxes by over 5.8 percent of GDP, making it the largest set of tax increases in U.S. history. I'm not entirely sure if anyone has ever run for the White House proposing tax increases of this scale."

The Sanders campaign disputed the analysis. "It is disappointing, but not surprising, that one of the most right-wing tax groups in America headed by a big pharmaceutical executive would mislead the American people about Bernie's tax plan," Sanders spokesman Warren Gunnels told Tax Analysts.

The reference was to David P. Lewis, an executive with Eli Lilly and Co. and chair of the Tax Foundation's board of directors.

"The truth is that Senator Sanders's economic agenda would lead to the creation of millions of jobs and would increase the income of middle-class Americans," Gunnels said. "At a time of massive wealth and income inequality, we must demand that Wall Street, profitable corporations, and the billionaire class pay their fair share."

The Vermont senator has repeatedly defended the $1.38 trillion annual cost of his health plan by saying Americans would save thousands of dollars a year by no longer paying premiums to insurance companies. And his family and medical leave proposal, he contends, would cost the average worker only $1.61 a week.

On January 26 the foundation estimated that Clinton's tax proposals would raise $498 billion over 10 years on a static basis but only $191 billion when scored dynamically. Clinton has proposed more than $1 trillion in new spending.

The Clinton campaign also accused the foundation of having a conservative bias.

For the Sanders plan, most of the new revenue would come from measures to pay for his healthcare and family leave proposals, including a new 6.2 percent employer-paid payroll tax, a new 2.2 percent worker-paid payroll tax, and the end of several tax expenditures related to healthcare.

Sanders would also significantly increase marginal rates and the cost of capital, the foundation said. On a static basis, it said, his plan would lead to 10.56 percent lower after-tax income for all workers after 10 years -- 17.91 percent lower for the top 1 percent of earners.

"When accounting for reduced GDP, after-tax incomes of all taxpayers would fall by at least 12.84 percent," the analysis said.

But Gunnels said: "These two initiatives -- Medicare for all and paid leave -- will cost the typical middle-class family less than $46 a month, which is significantly less than what they are paying today for healthcare. That is a very good investment."

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