Tax impact of Sanders' proposals still up for debate

WASHINGTON — Sen. Bernie Sanders says if he's elected president, he'll expect the wealthiest Americans to start paying their “fair share” of taxes. Exactly what that means is still largely unknown.

So far, the Vermont independent has proposed raising nearly $6 trillion in revenue from corporations, Wall Street speculators and the wealthy to rebuild crumbling infrastructure, provide free college tuition, expand Social Security and finance other programs.

But Sanders still hasn't provided details of his two most ambitious proposals— Medicare-style health care for everyone, and universal child care — or said how much he would raise income tax rates to pay for them.

“We haven't come up with an exact number yet, but it will not be as high as the number under Dwight D. Eisenhower, which was 90%,” Sanders said at the most recent Democratic presidential debate. “I'm not that much of a socialist compared to Eisenhower.”

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The cost of Sanders’ ambitious proposals — and who will pay for them — has come under scrutiny in recent weeks as candidates debate how the policies would affect the middle class.

Sanders, a self-described democratic socialist, has rallied crowds in the thousands around his belief that government should do more to protect working families, the elderly, children, the sick and the poor.

The $5.9 trillion Sanders would raise from corporations, Wall Street and the wealthy would finance the programs he's already outlined, with enough left over (about $2.6 trillion) to help pay for some of his Medicare-for-all plan and universal child care, according to Warren Gunnels, Sanders’ campaign policy director.

Sanders also is eyeing income tax hikes for the top 2% of taxpayers — individuals earning more than $200,000 and couples earning more than $250,000 — just as President Obama has proposed, Gunnels said.

It's still not clear if his "single-payer" health care plan would require a higher tax rate for people further down on the wage scale.

“It will be progressive and based on the ability to pay,” Gunnels said.

Former secretary of State Hillary Clinton, the Democratic presidential front-runner, says a single-payer health care bill Sanders introduced in 2013 would hurt the middle class. That bill would impose a new 2.2% income tax on individual taxpayers earning less than $200,000 and on couples earning less than $250,000, along with higher rates for people earning above those levels.

It also would impose a 6.7% payroll tax on employers, which likely would result in lower wages for workers. Previous single-payer proposals by Sanders also have included additional taxes.

“If you are truly concerned about raising incomes for middle-class families, the last thing you should do is cut their take-home pay right off the bat by raising their taxes,” Clinton's spokesman, Brian Fallon, said in a statement.

Clinton has not yet released her income tax plan but has pledged not to raise taxes on the middle class.

A single-payer health care plan, which would have no chance of passing the current Congress, would likely be the costliest of Sanders’ proposals. The Wall Street Journal says it would cost about $15 trillion over a decade, but Sanders rejects that estimate.

Gunnels said it’s too early to provide an official figure. But he said the 2013 plan would save Americans thousands by eliminating private health insurance companies and the associated premiums, copays and deductibles. A family making $50,000 would pay an additional $1,100 in taxes but would save an average $5,173 a year by not paying premiums or deductibles, he said.

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“This is a huge savings for middle-class families and for 95 percent of American families who would see their incomes go up, not down,” Gunnels said.

He said people also would save money under Sanders' plan for free tuition at public colleges and universities. Currently, college tuition averages $9,410 for state residents at public schools. Sanders would finance that plan's $75-billion annual price tag through a tax on Wall Street speculation that he expects would raise $300 billion annually.

The only middle-class tax increase Sanders has officially endorsed is in a bill he supports to provide at least 12 weeks of paid family and medical leave for all workers, Gunnels said. Middle-class workers would pay an extra $1.38 per week in payroll taxes— higher wage earners would pay an extra $4.36 a week— to finance that proposal, according to the bill's Senate sponsor, Kirsten Gillibrand, D-N.Y.

"We’ve provided the most comprehensive proposal out there to rebuild the American middle class and we pay for all the initiatives that Sen. Sanders has introduced to date by making the wealthiest and most profitable corporations pay their fair share," Gunnels said.

Sanders’ policies concern centrist Democrats, who warn that economic populism could hurt the party politically.

“Even the things he has proposed would require a tax hike on the middle class, and the rest, including single-payer health care, would bring giant increases,” said Matt Bennett, co-founder of the centrist think tank Third Way. “This is not a prescription for either middle-class economic success or broadly popular political proposals.”

Jared Bernstein, a senior fellow at the left-leaning Center on Budget and Policy Priorities, said, “In order to finance what is a very robust and progressive agenda, in many ways a very smart agenda, it’s going to take more tax revenue than he can collect on just the top few percent.”

Linda Blumberg, a health care economist at the Urban Institute, a liberal-leaning think tank, said it’s possible to make sure that the benefits of single-payer health care more than compensate lower- or moderate-income households for higher taxes. But the idea still isn’t politically palatable, she said.

“We have quite a long ways to go before the electorate is ready to pay higher taxes in order to eliminate the private health care system,” she said.

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