WOW: Math Proves Democrat Presidential Candidates Policies Will Hurt The Middle Class!

By Brandon Hall
(Email Him At WestMIPolitics@Gmail.com)

The Washington Post recently featured a great article about how Democrat proposals will hurt the middle class, check it out below:

Democrats’ 2020 policy proposals almost certainly require middle-class tax hikes

Some left-leaning economists argue the plans would help middle-class families overall by reducing their spending on health care, education.

By Jeff Stein 

Sen. Kamala D. Harris (D-Calif.) is campaigning for president on a plan to cut working-class taxes by nearly $3 trillion, promoting legislation that would boost wages but slash federal revenue by giving thousands of dollars to millions of Americans.

Harris has also backed Sen. Bernie Sanders’s (I-Vt.) Medicare-for-all legislation, which would require increasing federal revenue by as much as $30 trillion — almost certainly requiring tax increases on many of the same families who would see cuts under her tax legislation.

The tension between the positions, some economists and political strategists say, underscores one of the most fraught issues Democrats will face as they push a dramatic expansion of government investments in infrastructure, education, housing, health care and new renewable energy sources, among other items.

For several presidential election cycles, Democratic candidates have pledged not to raise taxes on the middle class, a position that was deemed politically necessary even if it would ultimately cap the ambition of their proposals.

Now, Democrats in Congress and on the 2020 presidential campaign trail have proposed a number of new or expanded federal programs but have been largely silent on how to pay for them, saying that the details can be filled in later or during the process of passing legislation. The lack of clarity over how to finance these plans has fueled a debate among economists and policymakers, with conservatives and even some Democrats saying they require middle-class tax hikes that will prove hurtful for economic growth and the party’s political fortunes.

“Democrats have to be careful here: If they’re going to pay for these programs, the math suggests middle-class taxpayers are going to be hit,” said Jim Manley, who served as an aide to former Senate majority leader Harry M. Reid (D-Nev.). “And that’s not what Democrats have traditionally stood for.”

Backers of these plans acknowledge they will require middle-class tax hikes but say Democrats should defend them anyway. They argue they will improve Americans’ lives in part by greatly reducing families’ private spending on expenses like education and health care, while also providing new public services and accomplishing key policy goals like combating climate change or improving schools.

“We shouldn’t be scared to talk about broad-based taxes that will affect the middle class,” said J.W. Mason, an economics professor at John Jay College of Criminal Justice in New York and fellow at the Roosevelt Institute, a left-leaning think tank, who noted that the federal government could also afford to add spending to the deficit. “The U.S. has a lot of space to raise income taxes while still being below the average for most European and rich Asian countries. When the taxes are clearly linked to public services people value, I don’t think it’s such a challenge.”

Left-leaning Democrats have rolled out several new ideas to dramatically increase taxes on the rich, including Sen. Elizabeth Warren’s (D-Mass.) tax on wealth above $50 million, Rep. Alexandria Ocasio-Cortez’s (D-N.Y.) proposed 70 percent tax on income above $10 million, Sanders’s proposed 77 percent tax rate on billionaire estates, and a Wall Street transactions tax.

Estimates vary, but Democrats could likely aim to raise as much as $10 trillion over 10 years if they implemented all these taxes, including if they significantly increased the corporate tax rate, economists say. They could also free up another $3 trillion cutting defense spending and spend another $5 trillion through higher deficits, using generous assumptions

By contrast, the party’s left flank has proposed upward of $43 trillion in new spending, according to Brian Riedl, a conservative budget expert at the libertarian-leaning Manhattan Institute.

“There’s no possible way to finance even single-payer without big middle-class tax increases,” said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, a think tank that pushes for lower deficits.

Jeffrey Sachs, a professor at Columbia University who backed Sanders in the 2016 presidential election, said these policies could be financed in part through higher taxes on the middle class. He pointed to the example set by America’s peer nations in Europe and argued the United States is the outlier rather than the norm, noting Scandinavian countries that publicly provide health care, college tuition, paid vacation and family benefits are consistently ranked the happiest in the world.

Medicare-for-all in particular would require tax hikes on middle-class families, but supporters say it would save them money overall by eliminating their private premium and deductible payments.

“We live with this huge financial insecurity. And it’s weighing heavily on our well-being, our social trust and people’s ability to get by day-to-day,” Sachs said, citing high levels of depression and declining life expectancy in the United States. “Countries with higher levels of public benefits, matched with higher levels of tax revenue, are much happier for it. The evidence is overwhelming.”

The United States takes in far less tax revenue as a share of its economy than all but five other economically advanced countries, including Mexico, Turkey and Ireland, according to the Organization for Economic Cooperation and Development’s rankings. In the United States, tax revenue represents 27 percent of the entire economy, compared with 34 percent in the OECD average. In Finland, Sweden and Denmark — where residents have a longer life expectancy and lower poverty rates than those in the United States — tax revenue represents around 45 percent of the economy.

If the United States took in roughly as much in tax revenue as the Scandinavian countries do, the federal government would have an additional $50 trillion to spend over 10 years, said Matt Bruenig, founder of the People’s Policy Project, a socialist think tank.

Democrats have traditionally bet against this kind of pitch to American voters. In the 1990s, President Bill Clinton promised to cut taxes for the middle class while raising them only for the wealthy. He raised taxes on the richest 1.2 percent of U.S. taxpayers, while also lowering a number of taxes for lower-income Americans. 

President Barack Obama backed, and then helped pass, an extension of President George W. Bush’s tax cuts for all but the richest Americans. The Obama administration decided against supporting a plan, modest by the standards of the 2020 presidential nominees, to fund a paid family leave policy by increasing the payroll tax contribution for workers and companies by 0.2 percentage points. 

Conservatives express confidence they can beat Democrats forced to admit their plans require middle-class tax increases, while arguing they would hinder economic growth. Riedl, of the Manhattan Institute, said tax hikes of the magnitude required by Democrats’ plans would require doubling the payroll tax and imposing consumption taxes higher than those in Europe.

“With incomes growing slowly over the last few decades, a lot of families can’t handle a large tax increase. They’re having a hard enough time making ends meet,” Riedl said. “And, of course, the politics are deadly. If you look at surveys, it’s usually about only 30 percent that will pay higher taxes for additional government benefits.”

The political incentive to cut taxes for the working class may inform Harris’s legislation, called the LIFT Act. Several economists argued that the plan also acted as an effective anti-poverty measure, by delivering upward of $3,000 (or $6,000 for married couples) for those earning under $87,000.

“You can either provide specific program benefits or take the path of providing more cash. There’s some merit to the idea of just providing cash, because people in various situations have very diverse needs,” said Elaine Maag, a tax expert with the Tax Policy Center, who provided input into the plan. “When we give people money, they can apply their knowledge of their own situations to solve their problems.”

But Sachs, of Columbia University, argued prioritizing a cut to middle-class taxes represented the wrong direction for the party, given the need to maintain or raise them to finance the party’s many priorities. (A spokesman for Harris did not return a request for comment.)

“Starting with tax cuts does not consider the comprehensive fiscal picture, including all the areas where fiscal investments are needed,” Sachs said. “This is the time for significant change for how we’re operating in this country — to address inequality, climate change, skills, infrastructure — and I’m skeptical how large tax cuts will fit within that overall picture.”

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Brandon Hall is a lifelong political nerd from Grand Haven, and is the Managing Editor of West Michigan Politics.

>>>Email him at WestMIPolitics@Gmail.com
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