Bernie Sanders’s Tax Plan Would Test an Economic Hypothesis

Combined taxes on the highest earners would reach or pass the point at which higher rates mean less revenue — which could mean tax receipts disappoint.

Comments: 228

  1. Where is the real world data from other countries and why scare monger that because higher marginal rates will bring in less than expected, and single payer would cost more than estimated, these are two reasons to assume that further tax increases on lower tax brackets will become necessary. The what if's that are missing are as interesting as those in your focus.

  2. Is it really possible for Bernie to be so shortsighted as to not imagine the greedy will exercise every measure to alter/hide/disguise the amount of their pre-tax income? Not very likely. There's so much wealth among the one percent that even when they cheat and hide half or more of their income (and they will) his programs will be funded.

  3. There's not nearly enough wealth among the 1% to fund his programs. That's why the vast majority of the funding comes from raising *everyone's* taxes.

  4. 73% taxes?
    Question 1: Would you? would anybody work 6 hours a day for the tax authorities and just 2 hours for you and your family?

    Question 2: Who are the people who earn salaries with a 73% tax bill?
    These are the engines of the economy: without their drive, their dreams and innovation there is unemployment and stagnation. These high salary earners can leave: in every country they are welcome. Just look at France's economy after Hollande declared 75% tax for earnings over 1M Euro.

    Let's hope the American voter recognizes this "equality bluff".

  5. You obviously don't have a clue about how taxes work. The 75% rate is a marginal tax rate, which applies only to the portion of earnings above a certain level. In this case, it applies to that portion of income which exceeds $10,000,000.

    As for your statement that the ultrarich are the people who drive the economy, the history of the last 30 years puts the lie to that one. If taxing the rich less and less creates more jobs, then where were the jobs after the Bush tax cuts? Funny how the economy has been doing better since Obama eliminated the Bush tax cuts on the highest earners.

  6. Yes, President Obama's enlightened tax increases kicked of American economic growth that has made our economy the envy of the economically stagnant world. Higher taxes equal higher growth, if only the rest of the world would recognize this and we could get Europe, Japan, etc moving again.

  7. The engine of the economy is demand! If the middle class has enough money to keep demand up, then we do not need the superstars and the plutocrats. If a giant corporation providing incomes to 6 of the ultra rich is broken into 16 corporations providing more equal incomes to greater numbers of people, then the demand for the economy's goods and services will remain strong enough to give people drives to earn, innovation to revolutionize, and defeat unemployment. #RegulateGreed to understand how water and economic value flow uphill, and how employers can redistribute excessive incomes rather than having governments claim it and redistribute it less efficiently.

  8. For starters, Sanders' plan would never make it out of committee, let alone pass both houses of Congress. (FWIW: None of Sanders' plans would get through Congress and he has no support base in Congress to make it happen.)

    The tax problem began with JFK who, to eliminate the confiscatory 90% rate, simply dropped the top rates from the IRS tables rather than re-indexing the tables. Then Reagan did the same thing with the remaining top income brackets thereby putting the top income people in the same bracket as Upper Middle Income. Since then more brackets have been eliminated assuring that any attempt to "Tax The Rich" winds up hitting Middle Income as well.

    We need 15 brackets - five for lower, five for middle and five for upper incomes all indexed to inflation. For those who argue for a "Flat Tax" this is actually a stepped Flat Tax where all dollars at each level are taxed at the same rate for everyone. The only issue is that if you have income above that step that income gets taxed at a higher rate that progresses to include everyone.

  9. Yes, when will Sanders discuss how he will work with Republican majorities? Hopefully he will do that immediately after being elected rather than putting it off as Obama did.

  10. Economics is clearly not Mr. Sanders' strongest area of knowledge and expertise, but he is obviously miles above clueless journalists. Any half awake Econ 101 student knows that a tax receipts outcome "near the revenue maximizing level" means nearly the most efficient result for raising funds without negatively impacting economic growth. In practical governing terms, that means the about the best anyone could reasonably expect.

    Furthermore, any newspaper reader with half a memory of the past twenty years can recall that the Bush tax cuts of 2001 -which were a step 180 degree opposite from the efficient, sensible or justified proposals of Sanders- did little for the US economy other than fuel one of the most disastrous bubbles and crashes since World War II.

  11. Add the Medicare Modernization Act and two unfunded wars! Bush was a disaster, and I'm a fiscal conservative who is supporting Sanders really on what you just stated. The fact is our taxing structure was brought far far left under Bush and the real estate / market crash of '08-09 really put President Obama in a bind to undo the mess created by the Bush administration. Defense spending is the low hanging fruit in the budget and we should make deep cuts there. Back to your point; yes, we need to get to an effective and efficient tax structure. If at 34%, Mitt still would have lived comfortably on $13.9 million in 2012 for the YEAR.

  12. Bernie Sanders has on his campaign staff one of the better economists in the world, Dr Stephanie Kelton, who took two years leave of absence from the Economics Department, University of Missouri, Kansas City, to fill this new role. I am sure that Dr Kelton would know what needs to be done to curb tax practices that favor the already wealthy.
    A sovereign (currency issuing government) spends first then taxes out of existence monet that is likely to have adverse effects on the economic and social well being of the citizens.

  13. Stephanie Kelton, as a major proponent of Modern Monetary Theory, knows that a government that issues its own currency doesn't need anyone's tax money. A government that issues its own currency can shred every tax dollar sent in and still be able to fund whatever it wanted, whenever it wanted. That's a basic, bald truth that gets lost in all of this "the deficit sky is falling" fear-mongering. Taxes serve a function, but it certainly isn't to fund (federal) government spending.

  14. If he's a professor at the University of Missouri, he can't be that good :)

  15. Josh: Since 80% or so of the Social Security tax cuts off at a relatively low level of labor income, it is incorrect to add that to the 52% marginal tax on incomes above $10 million. If you want to look at actual tax burdens of the ultra rich, you need only examine the income tax returns of Mitt Romney published when he was running for President. Despite earning tens of millions of dollars each year, Mitt paid a much lower average federal tax rate than I did over those same years. Similarly, Warren Buffett has said he pays a lower tax rate than his secretary. Published marginal rates are meaningless when no one actually pays them because of tax loopholes and creative income accounting.

  16. Unearned income is taxed at a lower rate, but you too can take the risk of investing millions. The NASDAQ is off 20% from last year.

  17. Agreed!! We ought to be truthful about our tax rates!! How about a 100% tax on all earnings after the first $15 million? That would cap all income for individuals and employers can then redistribute those excess incomes. Government would not get to redistribute those amounts, since no one would go over that cap. No one would pay that tax; why would anyone earn more than $15 million if all of it was going to be taken away? #RegulateGreed to ensure income equity and less dramatic business cycles and fewer bubbles compounding each others collapses. Employers could redistribute excessive income to research and development, higher hourly wages, training, market expansion, health and safety, etc.

  18. The Federal Reserve has created trillions in debt-free money (QE1, 2, 3) to bailout reckless lenders and brain dead investors. All of which has occurred in recent years without stoking inflation. The Fed can easily bailout the U.S. economy in a similar way. Tax rates don't necessarily need to change much, except as needed to curb inflation. It is entirely arbitrary today that macro policy requires a separation between monetary and fiscal measures. FDR often combined them to achieve his economic goals. This didn't please the commercial bankers however.

  19. It has already been tested. Go to taxfoundation.org and look up the inflation adjusted tax levels for 1957. The top tax bracket, a bit over $3 million per year in income, is taxed at 91% for federal income tax alone. That tax rate paid off the debt from World War II, built a national highway system that is currently falling apart, paid for our defense, and sent man to the moon.

    Progressive tax rates work. They worked here in this country, and they work in Europe.

  20. For progressive/confiscatory tax rates to work as they did in the 1950's, it helps to have the worlds other major industrial powers bombed to smithereens.

  21. The difference between now and 1957, is that in 1957 we were still in a huge growth period based on integrating technology from the war period into our economy and from fulfilling the huge deficit of personal consumption that occurred as the result of nearly 20 years of Depression and war rationing.

    The growth caused the tax rate to be supportable. The tax rate did not cause the growth. In a different economy, the high marginal rate would not have had the same effect.

    Progressive taxing is useful, but there is almost certainly a limit on how much we can get before people just decide to take their money and companies abroad. That rate is higher than we have now, but probably not as high as we want for the programs we want. Grow jobs, grow revenue.

  22. if it works so well in Europe why is their economy smaller (gdp per cap), less productive/innovative and unemployment higher? Think of all the great advances in science and technology coming out of europe over the past few decades! Like almost nothing.... Im sure you can cherry pick a few countries that are doing relatively well, but the majority (france, Italy, spain etc) are not

  23. I am reminded of Bob Hope (or George Burns) remarking on the much higher than today top tax rates, "I just call the government up and ask them how much they need."

    Interesting discussion, but simply theoretical - Sanders will not be elected. If by some truly strange twist the voters elected a self-proclaimed socialist, the Congress would never pass any of it.

  24. We have heard nothing from Sanders on how he will cross the political gulf and work with the Republican majorities. Hopefully he will concentrate on it a great deal more early in his administration than Obama ever did.

  25. Or maybe those who elect Senator Sanders will also change the make up of our shortsighted legislative branch. Better a Sanders revolution, than one like the French had.

  26. This piece is misleadingly overstated. Its main idea is that Bernie's tax proposals would "test a hypothesis" and be "revolutionary" just because he calls for top marginal tax rates "more than 20 points higher than today."

    Well, as anyone who looks up the facts can quickly see, from the mid-1930s to the early 1980s the top marginal tax rates were at or above 70 percent. So for half a century Bernie's tax plans would have been fairly unremarkable. And Republicans like Eisenhower seemed to go along with it. If not I'm mistaken, this was also the period of America's greatest economic growth.

    Moreover, the author makes no attempt to place America's tax policies in a global or comparative context, where again Bernie's proposals would be fairly unremarkable. Center-left, perhaps, but still run-of-the-mill.

  27. The deductions at that time (when marginal rates were much higher) were also substantially higher. The "marginal" rate is completely different than the "effective" rate. In many cases, due to deductions, the effective rate was close to 0%. Which is not good either. The point is you cannot compare the 50's to Bernie's plan... at all. I am not criticizing either plan (the one from the 50's or Bernie) I am just writing you cannot, at all, use the past tax rates as justification.

  28. If you lived in the US through that period you would know that the high tax rate merely shifted compensation to a non-cash model. Leased cars, large expense accounts, corporate jets, Cadillac healthcare plans, paid country club dues and big pensions were the reward, not higher pay that would be directly taxed!

  29. Thank you.

  30. If you want to know how high marginal tax rates affect economic growth, you need look no further than the '50's and 60's, when tax rates on the highest earners was over 70%:

    http://www.businessinsider.com/history-of-tax-rates-2012-5

    In fact, high tax rates on those who have the money is an absolute necessity if the economy is going to function for everyone. Otherwise we have the situation we have now: The top bracket has so much money that they are driven to stash it offshore or hide it in other relatively-unproductive places, while most everyone else cannot make ends meet. On the other hand, taking the money from the non-productive rich and spending it on necessary public objectives like expanded Social Security, needed infrastructure projects, and renewable energy systems has the effect of putting money into the pockets of people who will spend it. The result is economic growth and more stability.

    Bernie is right. We need to return to the era when money worked for all, and not just the plutocracy.

    BERNIE IN '16

  31. Beautifully stated!! The unproductive efforts of the excessively rich mostly look to secure their gains for themselves instead of keeping those funds circulating in the active economy. Just think what the employers could do if they kept the funds? Think how their business sense to redistribute the funds would work out? I think the rest of the public would still get the funds through income, and taxes could be collected from everyone's higher earnings. #RegulateGreed is the objective.

  32. The big problems with candidates such as Sanders is that he is not a businessman nor has finance aptitude of any sort. People are moving out of high cost states such as NJ so with a 73% plus tax rate they will move to other places.

  33. Well, they would have to leave the country. And if they were willing to do that, they would presumably want to go to other "civilized" and stable governments which would likely land them either in Europe / Scandinavia, Canada, Australia, New Zealand, parts of Asia. All which have higher combined tax rates for individuals than the USA.

  34. An interesting review of some of the implications of Sanders pie in the sky tax proposals to fund his single payer universal healthcare system. It hardly seems worth the effort since neither are ever going to happen. The Sanders agenda is quite as zany in its way as the wilder shores of idiocy being heard from the likes of Trump and Cruz but is cheered by the left of the Democratic party thus proving that confirmation bias knows no political boundaries.

  35. This whole concept is flawed. When taxes go up, people do not reduce their effort to gain more income, they simply increase their effort to find loopholes.

  36. "Mr. Saez and Mr. Diamond report a range of uncertainty around their own estimate of 73 percent as the revenue-maximizing top rate"
    Then why can't you report it as well? For a number heavy piece already, you left out one of the most important ones.

  37. I suspect "trickle-down" & "supply-side" economics were also just hypotheses. But we've been living with them since King Ronnie & look how well they turned out for the wealthy.

  38. A Sub-S Corp can easily reach the $500k threshold, yet there is little cash to pay Uncle Sam. It is tied up in receivables and inventory. That's when you borrow money to pay taxes.

    The following year, you deposit 90% of than, due to the safe harbor rules. Even though small business is a crap shoot, and you may never reach that level again.

    Sanders is naïve. His followers are even more so, and foresight is in short supply. Bernie is all about punishing the winners, both real and perceived. His tax plan will never see the light of day, and given the dreadful economy this is no time to be an idealist.

  39. Tax rates anywhere near 73% will have two consequences.

    The first is tax avoidance by legal & illegal means and the second is that people will decide to just work less.

    Back in the 70's, I saw higher paid co-workers simply decline work that would be taxed at high rates. Imagine what a benefit to society it would be if surgeons decided to limit their work. At 73% you are working to support the government with little benefit for yourself.

    Anyway, as several posters have already pointed out, there isn't a snowball's chance in hell of this becoming the tax law. It is as screwy as some of the Tea Party ideas.

    What we need is real tax simplification and elimination of things like trusts that allow legal tax avoidance.

    An example of such simplification would be to limit the personal tax deduction for mortgage interest to the mortgage on your residence and to cap it a a number that equals a middle class home's mortgage and index it for real estate inflation.

  40. If that is the case, then this Democrat would jump ship long before any of this happened. What is wrong with anyone who thinks this tax rate on anyone is OK. If this is the result, then long live Donald Trump. When did liberal democrats become just as insane as Tea Partiers. There a lot of gay people who will finally venture to vote Republican with this crazy economic proposal. Demonizing the rich is no strategy for any success even if trying to address income inequality. Wake up millennials Europe is not in great shape.

  41. Europe isn't in great shape due to the fact that it's not actually a country, but a confederacy with shared economic policy and currency. The problem with that is clear: individual states cannot control economic policy (devalue their currency) in order to bolster their economies. The US has been more successful in the recovery due to the sharing of economic resources between states via the framework of a centralized government (amongst other reasons).

  42. When is the media going to call Sanders the Communist that he is. His "Income Inequlity" shtick is getting a bit old.

  43. You were almost there but you missed the last step. To what end does Sen. Sanders want to drive down incomes at the top? Answer: to drive up incomes at the bottom (a $15 minimum wage will help, too). He's maximizing revenue on top earners and increasing taxable income for everyone else. This isn't rocket science.

  44. We had a 91 or 92% top income tax rate in the 50s, to pay for WWII and the Korean War. We needed the money. Ike was president, and there was a small Republican majority in both houses. Well, we need the money now. Poverty, education, you name it. And when low income people get a raise, the economy picks up. Lastly, a single payer system could drop the share of GDP we spend on health care by half. That would do a lot for our economy.
    We need to elect Bernie and some reasonable reps and senators. And the first priority should be getting big money out of politics, because that is the root of our problems.

  45. Is anyone else tired of the argument that only businessmen (and women) can understand the economy and solve our problems? The thinking that created this mess is not the same thinking that will get us out of it. It sounds heretical, I know, but capitalism cannot solve the problems of capitalism. A new way of thinking about money, life purpose, justice, and happiness is needed. Capitalism has served us well but it is the only game in town. Bernie's enlightened socialism is needed now.

  46. I'm tired of that argument, too. And also the argument that only oncologists can understand and treat cancer. Please. This type of logic seems to be endemic among Sanders supporters. The problem is with crony capitalism, not capitalism. The Bush administration failed us in allowing this system to flourish, and the Obama administration failed us in properly enforcing and punishing these transgressions. I do agree with people like Warren that certain parts of the system are rigged and these failures need to be corrected. But the way to fix it is not with "enlightened socialism", whatever that is; it is with true free-market capitalism, not the oligopoly that is currently in place. The government exists to correct market failures, not to heavy-handedly control the economy. Central control (ie socialist) governments are horribly inefficient, and the successful ones (eg Denmark, Sweden) get by on having a small, wealthy, homogeneous population. The best solution for America is to put systems in place that help people and communities help themselves, not have the government do it all for them. Unfortunately but unsurprisingly, one side wants too much intervention and the other side wants too little. Michael Bloomberg's common-sense centrism is needed now.

  47. It's good that some people are beginning to think in a semi-serious way about the effect of taxes on incentives instead of relying on the patently false assumption that higher taxes reduce incentive. But obviously the "73 percent estimate" and others like it are worthless. Top rates were much higher than this for a long time between the early thirties and 1965 and the economy performed better than when rates were cut after 1964. There was no problem with revenue and debt/GDP fell rapidly after WW II.

    There are too many unverified assumptions in models like this to give them any validity. Economic models may be learning tools but they are absolutely not good enough to make national policy with. Economists persist in valuing them over real-world experience.

  48. Here's the thing I don't understand. I get that you need to raise taxes to pay for these expensive plans, but if he's so progressive why isn't he looking into different solutions? Why take more money out of the pockets of those whom are not rich but mid to senior management level, abolish the marriage penalty tax (because really that's a negative incentive for women) and focus more of taxing these special interest groups like big Agra or Pharma or creating more sin taxes? You want that luxury car, ok pay another 10percent on it. That jet, that mansion? Plastic surgery tax? More alcohol and tobacco taxes? Or how about an extra tax on legalizing marijuana? I never understood this. How about the NFL? Internet sales taxes?

  49. You are talking progressive taxation location 1. Good idea.
    We did have that at one time in WA state, but initiatives tore that plan up and we now have cash strapped transportation.

  50. I think Bernie Sanders has the courage to make the right decisions. Progressive taxes worked well in the US from 1945 to 1980. On the other hand, soaring budget deficits during the Reagan years proved the Laffer curve, lower tax rates will increase revenue, was proven false. I guess the Tax Institute chose to ignore that evidence.

  51. High taxes were only in place to pay for the wars. And you couldn't be more wrong about Reagan. How did the economy do for the 20 years after Carter's recession? Go look at the 3 years after every major tax cut and you will see decreasing unemployment, increased tax revenue, and increased GDP.

  52. Ron - You are absolutely correct in your comment. Thank you.

  53. A political revolution would depend upon Dems having a majority in the House and 60% of the Senate - Not Happening.

    Second, he would not be a dictator. Whatever he proposes would be modified by Congress, like what Bill Bradley and others did under Reagan.

    At best, the Soc Sec loophole would be closed and there would be a new, slightly higher tax rates for those with million dollar and ten million dollar incomes.

  54. At some point, one has to start thinking about solutions that are best for society and the human race, rather than pushing policies that favor individuals to the detriment of humans as a whole. Worshiping the virtues of greed has got us to a world that is now teetering on the brink of scarcities and man made disasters; it is time to start thinking about a new paradigm for human progress. People like Bernie Sanders must be viewed as pioneers leading us into a new world, one where there are opaque dangers facing the human race, where disaster will strike rich and poor alike, and only enlightened policies and cooperation between people and societies will ensure our well being in the long run. It is time for a national discourse on what kind of society we are aiming for, and the means that are necessary to take us there. Higher taxes are just a small, small part of what we need to do!

  55. RajS - Thank you for your comment.

  56. Bernie is a good old fashion "New dealer".

  57. I never understand why there is so much trust that the government can run any of these suggested programs well on the expenditure side. If the government ran our grocery stores, we would all be starving to death. Time and time again look at the failures of the Federal government to run programs well. Examples are the Obama Care website rollout, and the issues at VA hospitals. I really think voters should look to their own states and municipalities to run the welfare and health programs. More power to the states so that government is closer to the citizen and or voter who can control the outcome better. Note also that everyone's taxes are going up by reading the final paragraph of this article.

  58. The big thing that most of you are ignoring is the fact that the top tax rates were only high in the past to pay for major wars. Look what happened in the years following LBJ's tax cuts, Reagan's tax cuts, and Bush's tax cuts. Unemployment dropped, GDP rose, and tax revenues increased. And before someone blames tax cuts for the 2008 recession, Bernie and Hillary both admitted in the last debate that Wall St was the main responsible party. What happened when taxes have increased? Look no further than the George HW Bush final 2 years, Clinton's first 2 years, and the first 2 effective years of the ACA.

  59. I think that before we start raising the percentage on millionaire incomes, we should look into what they're actually doing with the money. Are they really just spending it on frivolous luxuries and sitting on the remainer like some fairy-tale dragon? Or are they re-investing it in ventures that regular financiers would deem too risky or not profitable enough? I think we should should study that question a little more before we start removing a large amount of potential capital from the system.

  60. There is a very fundamental issue mentioned, but not really discussed in this article. Reference is made to Sander's desire to generate funds for "new programs" as if these were exotic add on's to the function of government and we needed to figure out how to pay for them.

    The F-35 project is already 135 billion dollars over budget and still doesn't fly Our new aircraft carrier (we already have 12) is similarly over budget after 13 billion in costs. Yet we characterize universal health care as a 'special program', whereas every other industrialized nation provides health care as a basic government service.

    This piece also fails to note that since the Clinton administration, three presidents, two of them Democrats and Congress have passed 10 Trillion dollars in tax cuts, all on the theory that greater wealth at the top will translate into greater investment on Main Street. For the most part that investment simply hasn't happened.

    So the most basic question is what do we expect government to do? Is it to support education, health care, infrastructure and the environment? Or is it to support a powerful,bloated military industrial complex that has become the most wasteful public works program in history?

    Tax responsibility will largely be determined by how we answer this very basic question. We should also note that during the 'golden years of capitalism', 1950-1980, tax rates on personal income in the upper brackets and for corporations were much higher than they are now.

  61. See my other comment re: 1950s vs. now.

    If those other countries were supporting their own defense, they wouldn't be able to provide such health care. Instead they shelter in the Eagle's wings.

    BTW, defense and all other "discretionary" spending is about 30% of the budget. The rest is Social Security, Medicare, Medicaid, and welfare. Those are the costs that are killing us.

  62. A hypothesis is a proposition that has never been tested. The United States had high tax rates, close to 100% for the top earners, for decades following WWII and the country prospered mightily, meaning that high tax rates on high earners has already been tested and proven effective. Therefore this is no longer a hypothesis, it is a proven conclusion.

  63. There is no way to compare the USA today to the 1950s. The US was the world's economic juggernaut. Most other industrialized nations were still recovering from WW2. Cheap foreign imports were very limited. Everyone drove an American car and had homes full of American products. Moms stayed at home and took care of the kids, helping to ensure they got the education and structure that enabled them to thrive as adults. Social Security was much more stable, with many more paying in than were takingout. Medicare, Medicaid, outright Welfare, and many more Federal programs and agencies didn't exist. People were frugal and lived within their means, not looking to the Government to solve all their problems. We were largely a homogenized white Christian nation, although civil rights issues were starting to roil. We had nowhere near the level of heterogeneously foreign immigration - much less of the illegal kind. Those that were here, we sent back. (Google "Operation Wetback"). As others have noted, those 90% rates applied to very few, and those folks got it down to 40% through various means. Because we were prosperous, we could have those higher rates; the rates didn't make us prosperous.

    Back to the 1950s, which most still look at as "The Good Old Days"? Sounds pretty good to me.

  64. His tax policy would be a disaster. The rich will never put with this nonsense. They would rearrange their affairs to avoid paying it. They would move out of the country, set up offshore accounts to hide income, etc. As the tax revenue from these high earners fall, it would fall on the middle class to make up the difference. By this time, enormous, wasteful bureaucracies would have been set demanding ever more volumes of money to operate. Since they are government run, it would be nearly impossible to cut their budgets. And, I almost forgot, the quality of these new services would be horrible-just like going to the DMV.

  65. I don't know what your DMV is like, but here in Michigan I'm in and out in less then fifteen minutes. I very rarely have to go because most of our DMV services are online. If the rest of government ran like our DMV I would be very happy. Perhaps you should pick another analogy.

  66. Senator Sanders and Thomas Piketty are great in their understanding of inequality. Unfortunately they lack the legal acumen to see the dynamic and fluid balance among wealth, income and sales. This left Piketty calling for a soak the rich style wealth tax and Sanders seeking for soak high earners. CEOs and billionaires increasingly wave taxable income in favor of non-taxable asset appreciation. Tax attorneys shift costs and corporate ownership to low tax political jurisdictions with non-taxable restructures of corporate form. Equally extreme suggestions from the right have sought to capture most tax revenue from just one tax base such as a 30% sales tax (FairTax) or from a too high 16% VAT and too low 10% income tax (Ted Cruz).

    In the big picture, taxing all bases would result in the lowest rates. For example a 4% VAT (the lowest in the world) combined with a low 8% C corporation tax would produce enough revenue to replace the job killing payroll taxes, save Social Security, eliminate inversions and repatriate $2.5 trillion in foreign profits.

    For individuals (and pass-through businesses) the Sanders-Piketty dilemma could be resolved by giving each taxpayer a choice of income tax rate from 8% to 28% that would be paired with a net wealth tax of 2% descending to zero. Each taxpayer would be able to save $500,000 wealth tax free (for retirement, education and health care) and cumulative wealth taxes would offset Estate and Gift Taxes. All sides win.

  67. Except the poor.

  68. The working poor pay 15.3% in combined payroll taxes. With no payroll taxes workers get a 7.65% raise in take-home pay and employers have less incentive to send jobs overseas. Modest taxes on business should also keep consumer prices low. It is a very good deal for the poor and the long term restoration of family wealth (which declined 70% for 62 million families over the last 20 years).

  69. How do the poor get by in the many countries that already have VATs?

  70. Mr. Warren Gunnels,
    We do not want the government to collect on "maximum-revenue generation" levels. We want corporations and employers to redistribute their incomes away from excessive individual earnings and towards more efficient uses: research and development, health and safety, higher hourly wages, expanding markets, etc. We do want to alter the actions of the excessively rich, we want them to feel a cap on their income so that they are not sending those funds to secret off-shore accounts. #RegulateGreed with 100% tax on all earnings after the first $15 million. Then employers can redistribute those funds, not government. This will require international agreements so we do not have millionaire flight to countries with lower tax rates.
    All my best,
    [email protected]

  71. For commenters here who persist in the argument that "Congress will not pass any of his legislative proposals", remember that the political revolution Sanders is talking about is millions of people getting on their phones and emailing their senators and congress people in DC and saying "I WANT you to vote FOR bill # ........." Currently, if a congressperson or senator receives FIVE calls on an issue, it's considered a big issue.
    Only the political force of millions, re-engage in their civic duty as informed citizens, willing to stand up and make their voices heard-will ensure that the structural changes that our economy, financial services, infrastructure and health care need are implemented.

    Wall St. and the 1% are afraid of the power of people. This is why Corp. media has not covered Sen.Sanders until recently (Not even C-SPAN covered Sen. Sanders' Financial Reform Speech, but did cover Clinton's!)
    We the people need to regain our power and voice.
    Sen. Sanders is the only candidate working to save capitalism from itself, and moving from oligarchy back to democracy.
    Only PBS provides his unedited full Financial Reform speech Jan. 5-2106:
    https://www.youtube.com/watch?v=bFL2qqvEpDA

  72. wow that means that eisenhower with top rates at 90% either performed an economic miracle or it was all an illusion.

  73. It wasn't a miracle, other than it being a result of many factors that are not going to repeat themselves.

    All we need is another world war that will leave all the other industrialized nation's economies in ruin, no cheap imports including immigrants, an actuarial reversal of Social Security, greater social cohesiveness, and elimination of many Federal programs. Economic bliss!

  74. "We do not assume taxpayers change their behavior." Could there be a more naïve statement than to think people smart and industrious enough to earn $10M per year are going to behave like sheep.

    This same edition of the NYT contains a heart-wrenching piece on Venezuela and the utterly predictable outcome resulting from the implementation of the policies Sanders espouses. But somehow, this time, it will be different.

  75. I suspect this is very misleading and would like to see your math. First, the high rates are marginal, not average (huge difference!). Second, state taxes may be deductible, thereby more than halving their effective rate at high incomes. Third, social security taxes phase out at just over $100K of income, and (like state taxes) can't just be added on. Frankly, I expect better analysis from the NYT!

  76. So let me get this straight...this guy thinks we're dumb enough to buy that this tax policy "discourages high-incomes" because it will raise their marginal tax rate on extra income? Let me ask everyone reading this a question.

    Imagine you're making $500k a year and being taxed around a 37% tax rate on that income, so you pull $315k after taxes. Then one day your boss offers you a raise to make $1 million a year, but you know your taxes on the extra $500k that you'd be earning would be around 42%. How "discouraged" by that higher tax rate are you? Would you decline the $605k per year income in favor of the $315k per year income?

    That's what I thought.

  77. Depends on how much more work it would be for the income bump. Marginal utility is a finicky thing. I would drive for Uber on weekends for the additional income because I'm not in a terribly high marginal bracket and the rates are good then. But I would not do it if I was paying at a higher marginal bracket because my free time has value independent of tax rates. It discourages side hustles from those who care enough to work harder than the 40 hours a week job. Don't underestimate the people who work extra to get ahead. There are many of us out there who participate in surveys, virtual assistant work, landscaping, babysitting, tutoring, etc to supplement our income because it currently is worth it despite self-employed payroll rates.

  78. Your numbers aren't consistent with the article.

    The "all-in tax rate" under Bernie's plan for income ranging from $500,000 to $2 million would be 65%. (See paragraph 7).

    So, if you were at a $500,000 income and your income shifted to $1 million, you would keep only 35% of your increase. You'd get $175,000 and Bernie would get $325,000.

    The problem here is that to shift from $500,000 in income to $1 million in income you most likely need to exert more effort. It's unlikely that the amount of effort you'd need to exert if worth the extra $175,000 in your pocket.

    And, the very big problem here is that the individuals who will want to exert more effort are the ones who are overseas in economies that do not have a 65% all-in tax bracket.

  79. We had a 70% top tax rate when Reagan came into office. He cut it to 50%, and tax revenue fell through the floor, causing a huge deficit.

  80. That isn't what happened. Tax revenue rose under Reagan, however expenditures (notably defense) rose substantially, which is what caused the deficit.

  81. No Revenue Fell immediately after the Reagan tax cuts. That combined with defense increase started us on the cycle of deficit spending we have now. Revenue rose right after the Clinton tax Increases which, surpise, left the country with a budget SURPLUS to the tune of 100 billion.

  82. Liberals are dreaming without facing reality. This 'Sanders' movement without practical approach to gain control of congress is just a bubble. We have seen how Obama has struggled with congress.

  83. Join up and we'll make Congress work for the People!

  84. How about more discussion about the spendinging side. Liberals llove the simple answer - being succesfull and wealthy is evil and should be punished. How about this analogy. If you had a friend that spent every dollar then made and then took loan and spent that? Would you be inclined to solve their problem by giving them more $ or first getting them to spend less and live with their means. Why reward Federal governement with more $ when they are doing such a poor job managing the revenue we are sending them now. At best, we shold have more $ going to the states so at least it can be more accountable to the local communities.

  85. You mean like the spending side of critical infrastructure which year after year conservatives cut, while slashing taxes on the highest earners, then claim government is bad at maintaining that infrastructure so they privatize it and let a corporation charge us more? The shell game of the modern day GOP is over.

  86. I guess this would be the first time we had a top marginal income tax of 52 percent or more... If we completely forget the fifties and Dwight D Eisenhower. He imposed this, and guess what? There were so many deductions and the place where the marginal 90% percent began was so high that even the wealthiest people in the country were paying about a 40 tax rate.

  87. Millionaires will NEVER pay 73% tax. They pay less than most people do now. People want free services but they dont want to pay tazes that pay for them. Millionaires already renounce citizenship so they wont have to pay US taxes but keep benefits of living in US. Companies now merging with companies in Ireland so they wont have to pay US taxes. This has become a "dodge the taxes" game for corporations and the rich anyway

  88. Bernie supporters want the free stuff he's promising. How to get it, not so much. He has no interest in foreign policy, and little understanding of it. I like his ideas in theory, but not in reality.

  89. Absolutely correct. Use good ole Mitt's tax return, where he reported 2011 "income" (probably all unearned) of $21 million. His effective tax rate was somewhere around 13-14%. The fruits of his "work" dismantling fully operating companies and working families during his Bain years. So he paid something like $2.8 million and kept the $18.1 to reinvest (maybe offshore) and build up the principal investment. There are no decisions to work in this case. None. The tax laws have been modified since Mitt submitted this, but I'd be happy if the unearned income rate was moved to the corporate rate. The change Bernie is proposing will never happen in the current state of Congress and the Senate, but he'll move the dial somewhat and push the issue to the forefront of tax reform. I'm Ok with that. What I'm not OK with is Republicans on the "tax cut" road again, which is nothing short of stupid given the deficit spending we've seen over the past fifteen years. That's the crazy talk.

  90. You're right - its the upper middle class who will instead get slammed by the tax increases. What Bernie doesn't tell you, is there aren't enough people $10+ million to fund his programs, even if taxed at 99%. He needs to work his way down the income brackets until he can tax enough people, enough money but still keep his populist base happy.

  91. This article is a more subtle form of Voodoo economics. All the stops are being pulled out in an effort to stop Sanders, while trying to still lamely claim objectivity. The slant is so pervasive that I am having trouble even believing what I read in the Science Times.

  92. I think a lot of people forget that high taxes, with equivalent benefits can be pretty appealing and actually raise the tax base from the bottom, while also getting people at the top to pay their fair share. That said, a marginal tax rate of 73% on ordinary income, completely disregards the issue, which is adding progressive taxation on investment income.

    My guess is that high taxes will do more to encourage people to save for retirement than anything else and should do great things for labour mobility and innovation. Single payer healthcare, quality primary and affordable post-secondary education will mean that kids growing up around the country will have the opportunities to succeed as others.

  93. I lived in California, which had a high tax rate and generous state benefits. The average of all state and local taxes I paid directly and indirectly for my last two years there was $90,000 a year.

    I moved to Texas and that has dropped to $12,000 a year.

    See, the problem is that I am not willing to pay more tax for more services. The problem is that I am not willing to pay more tax so other people get more services, whereas I don't.

  94. So are you advocating for national policies in which its everyman for himself and the devil take the hindmost? I don't think that's the best way to promote social stability and justice. Many third world countries are run like this. When those who have the most will not share with those in need, it creates a lot of pain and dysfunction at many levels.

  95. To Son: When other people don't get services, as in Texas, then the result is that you're surrounded by more problems, as in Texas. The price of civilization. Enjoy being behind your gate.

  96. I think Bernie is just following the best business practice of "ask high." Then with hopefully some new progressive members of congress to offset the jerks, we could thrash it out. Obviously the American people want to see this brought up.

  97. It's these kinds of issues that need to be brought out into the light for voters to see. I have always liked Bernie's broad concepts. But, as they say, "the devil is in the details." Does it really take this long for the experts and the media to inform the public? It shouldn't! Information such as this also needs to flow to media venues that younger voters access. Perhaps it might dim the brilliance of that halo young people see around Bernie's head! This man is not a viable candidate in the general election. His plans will never get past congress or the current supreme court.

    Hillary Clinton understands that change is incremental and that it requires the ability to negotiate and compromise to get anywhere. She is without a doubt the most qualified candidate out of both parties to lead this country. Bloomberg is poised to run if Bernie wins New Hampshire. That will spell disaster for democrats even though most of the slate of republican hopefuls is beyond bat guano crazy! It could mean Hello President Kasich! He just hides his crazy well. Wake up folks!

  98. Hillary Clinton is going to prison.

    Bernie would throw tens of millions of people out of work (well, not really since he would be a lame duck from day 1; the Hill would never go along with any of it).

  99. As soon as someone tells other people to "wake up", it's time to discredit their statements. Bernie is absolutely a viable candidate. Can't wait to shake up Hillary and later what might be the perfect candidate opposition in Trump. A man without a clue how this country operates for the average and working class man.

  100. No we can't just doesn't work for me. It is easy to tout incremental change when you can afford to pay $200,000 a day for a summer rental. The rest of us are attempting to raise families, send our children to college and save for retirement. We need REAL change.

    I am going to take a pass on your corporate diva. We have work to do.

  101. If higher tax rates encourage the very rich to limit their income, as Me Saez thinks, then that income must appear elsewhere. Most likely as middle income, income. This is what happened during the Eisenhower administration. Great! More middle income means more taxes. Everybody (except the very rich) is happy.

  102. Wrong. That assumes the pie remains the same size if the business owners stop working as hard given that each marginal dollar they earn is worth less to them. Maybe they're fine with $1 million salary so once they reach that point, stop investment in the business, stop growing and hiring employees and just clip the paycheck. People lose the incentive to work harder as the government takes more of each incremental dollar.

  103. Til the inevitable, that middle class beneficiary loses their job. Who do you think pays them?? And where do you get this fallacy that income will just "appear" in the middle class? Where do you think it comes from to begin with? The free market generates it, not the government. That whack-job Sanders thinks anybody is going to go through all that for 90% less reward? Why? You wouldn't. You don't now, and you could be a billionaire.
    If somebody with resources can't get as filthy rich as they think makes it worth doing, why hire you to help them do it?

  104. You have totally misunderstood the post-war economic boom.

    No one could buy anything during the war, so they saved enormous amounts of money (often through war bonds). When industry converted back to commercial production, that pent up demand kicked in. Adding to it were the technology changes, from airplanes, electronics, and washing machines that increased productivity across the country, and the GI bill that gave a whole lot of people access to higher education that they otherwise would not have had.

    The boom occurred in spite of the high taxes, not because of it.

    If you want to shut down retail for four years, come up with all kinds of cool inventions, and figure out a way to get a huge number of Americans into grad school, then you will see the same result.

  105. This article relies on some really twisted logic. I can't imagine myself turning down a high-paying job because I would have to pay more taxes. I guess that in a child's mind money could be the only consideration in such a decision.

    Washington is replete with people who make high salaries and endure higher costs than they would have to pay elsewhere, along with many inconveniences.

  106. I have turned down investment opportunities because the difference between gross earnings and net earnings after taxes flipped the NPV from positive to negative.

    I personally know people who turned down higher paying jobs in a higher tax state because the additional taxes were higher than the additional salary.

    I personally moved from a high income tax state to a zero income tax state for the primary purpose of tax savings. The super rich will flee to lower tax countries in record numbers. You may say good riddance, but the people that provide them all of the stuff they buy and the services they hire may not feel the same way.

  107. We've been through this experiment already, it began in the gilded age and ended with the great depression. trickle down economics promote oligarchy, which is what we have now. no president will ever stand up and admit that the government is owned by the oil, financial and defense industries, but we got there because oligarchs write tax policy to their own advantage. this country can profitably produce quality goods and services for all classes of americans, and still give the gold trimmed private jets a miss.

  108. "The super rich will flee to lower tax countries in record numbers."
    People can move to wherever they want, but if income in generated in the US, it can be taxed no matter where they live. Those who provide goods and services for them will be providing same to a general population enjoying higher incomes from higher wages, savings from health care costs, and higher Social Security benefits.

  109. We do not need to do the experiment here. Confiscatory taxes has been done in other countries. Cuba, for example. It doesn't turn out so well.

    The big impact will be on jobs. Taxes are an expense. If expenses go up in one area, they are going to go down somewhere else. Those people who fly the private jets and fuel the planes, the people who build and sell the fancy cars, the people that cater high class parties and rich people's weddings, and people that construct and furnish expensive homes will see immediate job losses. The most commonly owned vehicle by a millionaire in America is a Ford F-150.

    The secondary impact on jobs will be through less investment and business creation. There is a mathematical risk-reward formula for deciding whether to make an investment, whether it be a business start up, a piece of equipment, or a new employee. If the reward gets cut by more taxes coming out, then fewer opportunities will make the cut for the risk they have. If fewer investment opportunities are funded, there will be fewer jobs.

  110. "The secondary impact on jobs will be through less investment and business creation."
    What investment? Do we see any factories being built in the US? Corporations are so flush with cash due to low taxes and low wages that they spend almost a trillion dollars a year buying back their own stock, which is actually a payment to stockholders in addition to enormous dividend payments.

  111. What you will get is investment by people that arent so greedy, and when the greedy see there is money to be made, just not as much they will get back in the game.

  112. This article doesn't mention the fact that the U.S. tested this hyothesis for many years and economic growth was very strong in the face of much higher tax rates than Bernie Sanders is proposing for the highest income earners.

    From 1946 through 1964 the top tax bracket rate was 91%. That top rate applied to incomes greater than $2.4 million in 1946 and $3.0 million in 1963 (adjusted to the value of the dollar in 2013).

    In 1964 the top rate was dropped to 77% on income > $3.0 M

    From 1965 through 1981 the top rate was 70%. In terms of 2013 valued dollars the top rate in 1965 applied to income above $1.5M. By 1981 the top rate only applied to income above $0.5M

    After Regan became President the top rate was dropped to 50% - close to what Sanders is proposing now. But it applied only to income greater than $203,661, whereas Sanders' proposal applies a top rate of 54% to income greater than $10,000,000.

    Clearly our economy has grown significantly and been very strong in the face of much higher top tax rates on a much greater portion of income of the wealthy than Bernie Sanders is proposing.

  113. Very little if any of Sander's tax plan could happen before mid-term elections and unless a majority of people who support those increases are elected that will not change after mid-terms. Can anyone argue with that very obvious point? Passing the aca wasn't exactly a breeze.

  114. This op ed is flawed in the sense that it assumes that the solution to all of Senator Sanders' plans involves primarily increases in wage income taxes. Take health care for instance; from what I have read we, as a nation, spend upwards of 18 percent of GDP on health care. Other nations spend around 10. That means we are already overspending in that area. I have heard no argument put forward that says a move to single payer health care would cost us more than 8 percent of GDP. The only objection put forward is an ideological one that simply rejects practicality. The most recent figure for annual US GDP is somewhere in the neighborhood of 16 Trillion dollars. Do the math. The money is there we just have to move it around so it is more effectively spent. And there are other ways to generate income to fund other aspects of what Mr. Sanders proposes that do not involve straight income taxation as well.

  115. Do you seriously believe that the U.S. government is "effectively" spending your tax money? If so, you have little or no contact with any government agency.

  116. The money spent on healthcare is minimal for the high income earners. The article is about how high taxes will reduce the amount of work these people do. So the healthcare changes even if they materialized won't affect this analysis.
    As to just 'move it around' when talking about GDP it sounds quite nice except that's peoples money. You want to take what people earned and move it to a lot of people who didn't earn it.
    I am so glad that somebody whose backside never leaves the couch and breaths has a right to the money I earned from getting out of bed at 5:30 in the morning and going to work.
    Why are all these 'rights' always my 'obligation'?

  117. Bernie's tax plan is nothing new. It's been tried a hundred times before and has failed all but once and that was when Robin Hood gave it a try. The thing about taxing the rich is that they own the businesses and they pass those taxes down and as usual the middle class, if there were one left, would be the ones who get it in the butt. Interesting though how the Times passes it off as something "new" and "revolutionary" in the hopes that the stupid and the knieve might believe it. Fifty percent of the population won't care anyway, they just want Bernie to steal somebodies money for them.

  118. Bernie Sanders knows, as does his chief economic advisor Stephanie Kelton, that federal taxes in no way fund federal spending in our monetarily sovereign nation. The federal government can never "run out" of dollars, regardless of how much or how little taxes are imposed. Since most people (including the author of this article) are oblivious to this fact, it is assumed that the only way to pay for these programs is to increase taxes by the amount of money it will cost. This ignorance only serves to hurt us and every other non-ultra-wealthy citizen in the US.

  119. Exactly. When will the legacy economic concepts of the gold standard be purged from the conversation? When it no longer serves the overclass by providing faux economic justification for the their highly unpalatable politics.

  120. Are we supposed to take this article seriously when it neglects to put Sanders' call for higher taxes on the mega-wealthy in the context of the history of progressive tax rates in the United States? By avoiding that context, the author posits the false premise that higher taxes on the top earners is a radical departure from the norm. Why lie? The economic benefits of higher rates on those who can afford to pay such higher rates does not need to be tested. It has already been proven to be undeniably true during the period of greatest growth in United States history. Shame on you.

  121. Doesn't Bernie know that the ultra rich hire accountants and lawyers to figure out how to minimize their client's pre-tax income? In Britain, at a time when income tax rates were very high, a number of people changed citizenship. We only heard about the celebrities who fled. This naive "soak the rich" proposal is the foundation for his whole "vision." Trust me, these astronomical tax rates will never be enacted.

  122. @Nora Let them leave if they are not prepared to contribute to the economy through a fair taxation scheme. People here are sick and tired of tax avoidance polices that have increasingly allowed corporations to pay 0 in taxes and the super rich to pay an effective tax rate much lower than those in the middle class. At least one billionaire, Warren Buffett, agrees with me. The US now leads the world in income inequality, childhood poverty, the number of billionaires...among major nations. This is directly related to its tax policies. Eisenhower, a good Republican, had very high taxation, (much higher than what Sanders is proposing), massive infrastructure development agenda, lowest debt to GDP in modern history, best growth in GDP in decades, best middle class expansion, highest unionization percentage, etc. This was directly related to his tax policies. In neighboring Canada, there's higher taxes on the top part of the economy (save for corporate taxes) and thus greater government investment in the very programs Sanders is promoting. And citizens there are healthier, better educated, less poor....As an aside, I've been keeping a tally of the negative Bernie articles and pro Hillary articles coming from the major papers. So far, the Times and the Washington Post lead the way.

  123. The Sanders plan has merits, but needs to go further: All income to individuals should be taxed, using the same progressive rates, as ordinary income with no exemptions or deductions. That means ALL income. For example, capital gains would be taxed as ordinary income. Joint filing should be eliminated because it discriminates against wife's incomes, which are usually lower. Corporate profits tax should be eliminated. They are just passed on the the consumer anyway. And that would encourage companies to relocate back here (Perhaps that would apply only to companies not using semi-slave labor elsewhere). I have calculated what all this would do, and it would provide the revenue needed to run the government with a 40% cap on tax rate and a maximum of $20 million tax on the ultra ultra-rich. It's the broader tax base that makes this succeed.

  124. Thanks for point out that Sanders tax policies want ALL income taxed. As you point our if you put it all in the system rates do not have to go up.

  125. Can't the Saez-Diamond hypothesis be studied now using information available based on income tax rates by state. If the California economy is booming with a high state income tax, and the Kansas economy is slumping after an income tax cut, isn't the proof already available?

    It seems pretty evident that cutting the taxes on the wealthy does nothing for overall economic expansion. It is a far more interesting question to understand if increasing taxes on the wealthy actually leads to economic expansion. I think the individual states might be the Petri dish where the evidence from the experiment is already available.

  126. California is booming?

  127. Mr. Sanders is right about changing the tax laws put his plan is not fair and equal, why should a person who makes more money pay more in taxes?
    The Bible ask for a 10% tithe from its followers no matter how much money they make.
    So why cant we have a fair and equal tax plan with a flat tax of 10% on individuals with no deductions and 10% on businesses based on their sales
    with no deductions?
    Why cant we have a fair and equal tax system? everyone wants their handouts from the political party and the party politicians they support and none of these supporters wants to pay their own way they want others to pay their way for them.
    A flat tax of 10% would increase our tax revenue but this will not solve this nations money problems. We will have to stop our elected representative from spending our tax dollars like water and giving it to their supporters and those who have paid for their services.

  128. It's all in the numbers and has been discussed ad nauseum for years. A flat tax of 10% would accomplish what Republicans (I assume that's you) have wanted forever - starve the beast. They know that it is not enough to pay for even 1/2 of government, then they just shrug and say: "Well there ain't enough money to pay for Social Security, Medicare/Medicaid, National Parks, etc." The 10% flat tax silliness is the "Let them eat cake" plan.

  129. Steve I think you are incorrect. If you look at all income as a pool 95% of the income tax revenue is taken from 30% of the income. We have a large pool of earners that pay basically no Federal Income tax. If everyone paid tax there may be more revenue not less. Also as Obama said everyone would have skin in the game and maybe pay attention to the wide spread waste and abuse along with not demanding freebies that will in the end cost them. total income is $13,401,868,693,000 a year for the US. 10% would yield a revenue of 1.3 trillion dollars a year which is about what they take in now.

  130. A progressive tax plan is set up to try and keep an even playing field to prevent wealth concentration, and thereby income inequality. Those who make the most among us benefit most from what our society has built, and thus pay a higher tax rate.
    The people who don't pay much in federal taxes are some of the most taxed people, because all their earnings are paying social security taxes, state and local, and of course the sales tax. They may not pay federal, but they pay plenty of taxes.
    the largest problem today, is that the federal government taxes workers, and not investors. Capital gains are still income, and should be taxed as such. tax them at normal income tax rates. I work hard and you want to tax me 25%, while the multimillionaire makes money off stocks and they pay 15%? How is that fair?
    Some might say is that it spurns investment. Well, you pay no taxes on losses, only gains. If I told you that you could make 200K investing in a company, but had to pay 40% taxes, would you say no?

  131. Where's the proof? Josh Barro claims that Sanders' tax plans would actually impose a "combined tax rate of over 73 percent on the highest incomes, more than 20 points higher than today." Yet he offers no proof. His link to what one would assume was an explanation of Sanders' Social Security plan was nothing of the sort. Barry offers no numbers and no reference to any plan to back up his 72% marginal tax claim. Indeed, he first claims that the 73% marginal rate would apply to those earning over $5 million. But later, he contradicts himself, and, without any data or references to back it up, claims that the 73% rate applies to "only to people making over $10 million a year."

    So which is it? And where are the data upon which this entire column is based? Mr. Barro's claims strike me as unsubstantiated, his reasoning sloppy, and his conclusions most probably false.

  132. All the well meaning (and somewhat self serving) comments aside, this topic has two key embedded concepts that are overlooked at one's peril:
    1. Theories here assume that "wealth" is a national (and natural) resource and one's income is a function of how well one "mine's" the resource (at the zero sum expense of others not so capable). Hence the national government should and can control what each person gets regardless of his/her ability. But like all fantasies, when a central power takes over a resource they find it is not solid and there is little or nothing to distribute.

    2. The second concept is that a central government can "force" people to produce value at the level their abilities allow, can take it all and then give back only what the bureaucrats "knows" the person needs. Unfortunately that premise is equally fanicful and and fails to work.

    Conclusion: pursuing any of the "creative ideas" offered here will result in a shrinking pot of value, lower standards of living and more misery than even the most wishful can imagine (think Eastern Europe in the 70's).

    Good luck and thank God for the few adults in our midst that tolerate this kind of time sink and ignore it.

  133. I think there are a whole lot of areas in taxation that could be "tidied-up"; tax on employment income should not have to bear all the brunt of the expenditures needed to support certain programs. These include carried interest (hedge fund managers loophole; corporate taxation - or lack of (inversions, etc), estate taxes and others.

    I think the highest rate on income should be reasonable in the context of other advanced countries with strong social programs.

  134. How hard is this to understand. Bernie is proposing nothing more than the marginal tax rates that we had from about 1950 to 1980, a period when our country did very well, and our enormous debt as a % of GDP was whittled down from about 120% to around 20%, and a period with a way of life many so-called "conservatives" pine for a return to. The proverbial hit the fan when Reagan dropped the rates in 1981, and we have gone down the tube ever since. If you look at a graph of tax burden, we are around the lowest level that we have been at for the past 80 years or so, and frankly we can't afford to be. The problem is truly one where nobody will acknowledge that "the King has no clothes" and every pundit likes to complain that going back to what worked for 50 years somehow is a radical idea that will trash the country. For heavens sake, that 50 year period of sanity was the era that we did big things as a country, and now we can't even maintain what we have! No doubt there are inefficiencies that can and should be corrected, and waste cut out, and people who "game the system" cut off, -- but if you take a look at a pie chart of the Federal spending, the only really acceptable area you can cut is getting rid of debt service cost, and to do so you need more revenue. All the sophistry in the world won't get around the simple fact that we had more than 50 years where it all worked, and 35 years since that did not -- and the reason is obvious if you simply look at the numbers.

  135. A. very little income was taxed at the top rate of 70%; B. There were many more deductions and credits in the 60s and 70s (there was a time when all interest inc lncluding on auto loans and credit cards was deductible).

    The fact is that the average income taxes paid by the top 1% are now higher than in 1979 (pre-Reagan).

    http://www.theatlantic.com/business/archive/2013/01/in-2013-the-top-1-wi...

  136. The top 1% paid at an effective tax rate of 38% in 1980 when the top rate was 70%. They paid at an effective rate of 22% last year.

  137. Lies Damn Lies and Statistics.
    Paid more due to inflation not as a %.

  138. From what I can gather I would expect that my taxes would be at 40% as compared to 15% now, if these programs of Sanders are brought to us. with dubious benefits. Let us have choice, that is freedom. we are a democracy, give us opportunity, not confined limits to what we are allowed to achieve. WE aren't all the same as socialistic communism tells us we should be. Allow us to thrive and dream without penalty. Help us have supportive jobs. Let us decide what we need. No to Sanders.

  139. Unless you have a taxable income (after deductions and exemptions) of over $250,000 you will not see any increase in your federal income tax rate under Bernie's proposal. If you're only paying 15% now then your taxable income is only about $50,000. You will pay 2.2% of your taxable income for single payer healthcare but no longer have to pay any insurance premiums.

  140. You would assume wrong. if you are paying 15%, you are basically at the lowest tax bracket. All existing tax brackets would increase about 2.5%. That would be 17.5%, not 40%.
    And these taxes would pay for health care for all, and education. What more freedom could you have than not being burdened with paying for a surgery forever, or declare bankruptcy. Or to go to school at no cost and get an education? Your not losing any freedom by paying taxes.

  141. The only way I could see wealthy individuals accepting these tax rates is if the United States were fighting an all-out war. Absent that, I cannot see any Congress, be it Democratic or otherwise, levying taxes that high.

  142. We've been fighting wars for generations. The drug war costs billions and has incarcerated millions. The cold war was and continues to be incredibly expensive. We now have the war on terror on top of those other wars and all the while the countries richest people have been building a society that protects their wealth and grows their influence.
    Bernie Sanders may turn out to be another disappointment but he is offering solutions and if his plan for a political revolution does not come to pass at least we will have tried.

  143. The worst possible economic system we can possibly have (and what we currently have under Barack Obama) is one where a powerful, over-reaching government picks winners and losers. The system Bernie Sanders proposes is exactly that. It will lead to a powerful political class and a dependent, subservient lower class.

  144. Ummm, that's what we have now...

  145. This should not be an argument about what the "revenue-maximizing" tax rate would be. The government should not be in the business of maximizing revenue. The reason we are at this point is because the government has overstepped its bounds, and is trying to pay for things they have no business doing. Our federal taxes should be very small to pay for absolute necessities (national security), and the state taxes should be higher to pay for infrastructure, education, healthcare related costs, etc...

  146. You make a strange argument. You begin with "This should not be an argument about what the "revenue-maximizing" tax rate would be." and then go on to argue about what the "revenue-maximum" should be... Please clarify the point at which "government has overstepped its bounds", noting, of course, who has set those bounds and whether there is any 'wiggle room'. If you have a list handy, and apparently you do, please share with us what, if any, should be considered beyond "National security"? But. let's stop there a moment. What is the "maximum revenue" that should be applied to national security? How do you set this figure? How much security should we consider sufficient? Should we stockpile enough weaponry to win any conceivable war? How much would that be and at what cost? Would that number be an acceptable minimum for you? Should we count our capability in numbers of planes and ships as the conservatives seem wont to do, or in the numbers and wisdom of our diplomatic corps as the liberals seem wont to do. If you can answer all of these without hesitation, you are either a Trump supporter, a fool, or the Savior of the Free World. We await your answer. Breathlessly.

  147. This is a simple statement of belief. No economics. No ethics. No theory of government. Why is this being said?

  148. I agree with TNTrawlerman. Critics of higher taxes need to review American history. My sense is the years most Americans recall as exemplifying American Exceptionalism are the post war years. For portions of that time, the marginal tax rate was 90%. American business did very well, the middle class grew and prospered, and the government had sufficient funds to build the interstate road system, improve education, begin the space program, and meaningfully invest in healthcare research to name just a few initiatives. Times were not perfect, but with the notable exception of issues related to segregation, they were measurably better for most citizens than they are today. We do not so much need a revolution as we need an understanding of American economic history and a willingness to once again believe that government is not the problem.

  149. We had a huge edge over the rest of the world for two reasons: 1. North America emerged from WW2 unscathed while the rest of the world's economic regions were in ruins requiring decades to recover (if ever) 2. We had one of the lowest corporate tax rates in the world

    Both advantages are gone.

  150. Agreed, but the catch is that back then, China was a poor, rural, economically isolated backwater. We need to at least study the idea of how far can we effectively deglobalize. The tax system might be a part of this, because we may be able to use tax incentives to make it irresistible for companies to forego the profits of outsourcing and "free" trade and start making our own stuff here again.

  151. The two reasons you suggest gave us a huge edge over the rest of the world cannot be denied. But, how does that alter the fact that we also had the highest marginal tax rates, and still did quite nicely. Perhaps it could be argued, with this in mind, that regardless of what circumstances lead to higher incomes, the fact that they are taxed with marginal increases does not seem to be a major factor.

  152. stop the madness, this assumes for some reason that the government knows best how to spend your money. Do you trust the government to be the best steward of your money? Bernie Sanders voters will continue to be the uneducated and uninformed, the unproductive who want something someone else has earned to be given to them.

    Penalizing the productive to give to the unproductive is not a successful strategy. It's called socialism and it has failed everywhere it's been tried.

  153. That's right! We should get rid of all those socialist snowplows, freeways, fire departments, police departments, stop lights, drainage systems and everything else we need but that there is no profit in. Only the rich should get to go to school. We should plunder the natural resources and turn the excess population into and food source!

  154. Making $10 Million, and they are somehow PRODUCTIVE, sitting on their wallet and underpaying people to make more money for them.
    If they were fair instead of greedy these measures would not be needed.
    So if single payer is so bad why do you support Medicare and SS.
    This is all scare tactics by the wealthy to insure they don't have to pay for the services that only support them, and not the poor that pay for them.

  155. Missing form this discussion is the impact on our tax system from a greying population. In retirement, consumption rises relative to income. If we increase the income tax without an increase in consumption taxes, the overall incidence of our tax system will shift to the working population.

  156. Yes and no. True, consumption rises relative to income in retirement. However, consumption also rises relative to income as income goes down (i.e., the poorest consume the greatest share of the income they have). Hence consumption taxes are inherently regressive. Also, consumption tax revenue streams can be much more volatile -- especially downward, as consumers will cut spending in times of economic anxiety even if they still have jobs. Had we replaced the federal income tax with a national consumption tax a decade ago, the impact of the 2008 crash on federal revenue would have been greater and faster.

  157. Wage income in retirement obviously goes down, but retirees spend their savings. We see this most clearly in Japan. Moreover consumption taxes are not necessarily regressive. They can be structured to be either proportional or even progressive. A consumption tax is simply one element to be considered in reform of a tax system that most agree is administratively expensive and out of touch.

  158. Huh? 99.9% of those in retirement would not see a tax increase.

  159. The Obama campaign was also predicated on "change" but without the support of Congress significant changes were few and far between. The same can probably be said about Mr. Sander's goals and plans. The political "establishment" can and most likely would block any significant changes that would shift the balance of wealth (and power) that has become the lifeblood of politics and politicians. Although we still have a representative form of government the real question is who do they represent? The government Lincoln extolled was "of the people, by the people and for the people". Sadly, what we have is government of the people by career politicians for the special interests. With the Party system of politics it is almost impossible to foment change because they will only support those who will follow the Party Line. The primary purpose of elections is to create the illusion that we the people still have some control and influence of our government.

  160. A serious flaw in this argument appears in this line, "the illusion that we the people still have some control and influence of our government". The reality is that "we the people" are not of a single mind. We are strongly divided in what we believe, If these divisions were not as they are, we would be united in decrying the actions of a government such as that we see today. In fact, that is the only thing that does unite us, "decrying the government", but each side is applauding whatever its side achieves, or thwarts. I wonder what you might suggest as an alternative to "the Party system of politics"? Individuals all pushing their own agendas independently? Presumably these individuals would unite with like minded activists in order to gain strength for their argument. In these efforts toward forming more visible movements they might have to compromise in order to reach a more overarching goal shared by the majority, from coalitions with others, until major divisions in philosophies seemed to create a line beyond which it was difficult to venture. My guess is that we would end up with a two party system. Those who believe change can be accomplished via government action and those who don't. Using my crystal ball I can imagine these parties being referred to as "Progressive" and "Conservative", but that is just a wild fantasy on my part, of course.

  161. Since the year 2000, the United States has been running on free trade and free market economic theory with the deregulation of both trade and finance coming from a series of acts and treaties passed by Bill Clinton. Additionally, under Bush, we lowered income tax rates significantly.

    Since 2000 and up until today the averaged growth of U.S. GDP has been less than 2%. Prior to 2000, beginning in 1940, averaged growth was above 3.5%. America, it seems, did better with economic policies that protected our markets, our ideas, our producers, and our labor, than it has under the current rule set. Our middle class expanded faster and was stronger under the higher tax regime of the past.

    Our current policies are concurrent with great deal of uncertainty that is palpable and is manifesting itself in anger at the establishment. Our current policies are concurrent with a measurable decline in growth.

    The question is: Should we pursue economic policies designed to advance the actual growth and strength of our nation? Or should we pursue economic policies that are designed to achieve a certain philosophical agenda regardless the outcome?

    If it's the latter, we should stay the course we're on. If it's the former, we need to make changes - because our current economic regime isn't working for either the country or 90% of it's citizens.

    I'm feeling the Bern.

  162. According to the OECD, the U.S. now has the highest corporate tax rate in the world. On top of that, we are one of the few countries that taxes overseas profits (double-taxation) and why billions in profits never return.

    We are simply no longer competitive with such high corporate tax rates.

  163. All true. But here is something to consider US growth has declined from 3.5. as you suggest to 2.0 percent. But US economy is still growing faster than other OECD counties. Many of these countries have the same economic and tax policies that Bernie Sanders supports. Very high marginal tax rates, very high employment taxes.

  164. The only reason why our economy may be stronger (at the moment) is due to strength of currency. Our competitive edge (post-WW2) is gone. It's amazing how much ground we've lost relative to the rest of the world since 1940.

  165. Socialists never seem to learn from history. The modern-day wealthy are the most mobile group of people in the history of the world. Raise their taxes to extravagant levels and they move their money around (and likely overseas). The result is less tax revenue not more.

  166. So what is that lesson we should learn by awareness that the wealthy can avoid taxes? That we should not waste time taxing? In an effort to learn should we not look back at earlier eras when the marginal tax rates were higher? What is an "extravagant level"? Can you capitalists, who are so well informed by history, tell us exactly what a tolerable tax structure would be for all earners while still raising sufficient revenues to provide for what necessary government expenditures?

  167. The wealthy ultimately pay what they are willing to pay otherwise they find loopholes or move their money. Simple fact.

    The key to government revenue is growth and wealth creation. Increasing taxes on the wealthy has the opposite effect.

  168. This article reads alarming but ultimately inconclusive given the number of uncontrolled variables and lack of data/comparisons. I will say, however, that it is very unlikely something like this would be passed (albeit in a very watered down form) and that if his tax proposals (inclusive of payroll) were passed they could very well be extremely detrimental for several reasons.

    Aside from pushing down wages for higher earners these proposals could provide further incentives for the wealthy or corporations to seek tax shelters either by moving, choosing to instead invest oversees (and lower foreign investment in US) or lobbying for new tax loopholes. Further, although increased payroll taxes would come from employers this would make the cost of hiring employees incrementally more expensive, which could increase unemployment as employers look to manage expenses from higher payroll costs and taxes. Between the two aforementioned premises this would further lead to a snowball effect whereby consumers on the whole spend less (given lower disposable income and lower household wealth from an associated decline in the equity markets and possibly home values) resulting in declining GDP and recession or worse.

    If anything I would think a more apt solution would include a smaller tax increase on the wealthy, tax loopholes that encourage economic investments and a TAX CUT for the poor/middle class (why lower? higher marginal propensity to consume + money multiplier).

  169. How much of these higher incomes, in the $$millions, can be called "wages". We "poor" folks think of wages as our entire income, whereas those making millions have a room full of accountants separating each bit of "income" into the more favorable, if not legal, line on the pages of tax forms. That bit that finally appears on the line where the highest tax is levied cannot be assumed to astonish the payer into not accepting another film role, or skip playing in the Super Bowl, or decline the next invitation to be on a Board of Directors. It may be possible that in the realm where such things are measured, that rising to the highest level would be seen mostly as cause for "Bragging Rights" down at the club. "Damn! This new tax rate is killing me! You'll have to experience it yourself before you will have any idea what it means,,". Meanwhile, only his highly paid accountants will be aware of how much they will be able to skim off the top before being noticed... What establishes the level at which we lose interest in earning more? ..and when is enough to move one into a higher bracket not actually "more"?

  170. An awful lot of ifs and suppositions here. It is possible that bright mathematical and science minds have taken to greed and moved to Wall Street. If these individuals made less and shifted occupations, did something more fulfilling, what else might they imagine or create? And, in that imagination there might lie new ideas, and new industries that could simulate the economy... and thus raise tax revenue over all. Just a thought.

  171. In fact, the rate for maximizing tax for two-income couples, who make up the bulk of those who would be impacted, is much lower than 73%.

    Let's say you're a 2-income couple in Westchester where one spouse makes $250K and the other spouse makes $150K. Each spouse must pay $500 a month in commuting costs, they pay the nanny $3000 a month, they need an extra car, and they spend a lot on business attire and eating out.

    So the total they are spending to allow the second spouse to work, before taxes are taken into consideration, is over $60K. If taxes on the second spouse rise to 50%, then what we have here is a stressed-out corporate attorney who is working 10-hour days plus a long commute for $15K a year in additional spendable income. Of course, the most sensible thing to do would be to become a one-income family.

  172. I hope I'm not being repetitious but we've been engaged in an economic experiment in cutting taxes on the naive belief that by letting the most well off in society keep more, somehow that extra money would somehow benefit those on the lower realms of the economic ladder. I would argue that this experiment has been an abject failure for the vast majority of citizens. We are the most productive workforce in the world and we have among the longest, if not the longest, weekly work hours. Yet the economic gains have gone almost entirely to the wealthiest amongst us, leaving the rest of us with stagnant wages, diminishing benefits and more and increasing economic uncertainty. The time is long past to pull the plug on what is charitably called "voodoo economics". The people in the trenches deserve to share in the economic increases they helped create.

  173. In the grand scheme of things, individual wealth is tiny in comparison to global corporations. Look at what has happened with the U.S. in terms of corporate tax rates; billions in overseas profits not returning due to the highest corporate tax rates (including a policy of double-taxation).

    Wealthy individuals will just move their money around and find the loopholes. They're essentially going to pay the same amount in taxes regardless of the official 'rate'.

    The key to economic growth is to create wealth not for governments to play Robin Hood.

  174. Wealth transfer on such a massive scale is just wrong. Consider this:

    When I need a haircut, the barber doesn't charge me depending on my income. In fact, asking for my income (or how much I "can afford") would be offensive.

    Similarly, when I need government services, why should the government charge me (in taxes) based on my income? It shouldn't.

    We should have a flat tax, which by definition is fair - everyone pays the same amount.

    In fact, currently, the poor use many more government services than the "rich," even though the rich pay for everything. For example, the rich don't use: public schools, public transport, emergency rooms as regular doctors, welfare, public housing, etc. The rich use airports and roads, but there are taxes specifically directed to paying for those services. A flat tax would ensure everyone is paying their fair share.

  175. A CEO relies on public transportation and roads to ensure employees are at work or goods are transported. It can be argued that the "rich" rely even more heavily on government infrastructure in order to build their empire.

    Section 8 is not a handout for the poor but a great investment that guarantees me an income from the my buildings. SNAP and food stamps allow private companies to underpay their employees while still allowing them to shop there. When I hire someone I expect them to have an education because I cannot afford to teach them everything. I am using that public education to make money for myself.

  176. And in reality, said CEO moves his company overseas if/when taxes are lower and finds employees with equal or better education.

  177. I was talking about personal income tax, the subject of the article. In contrast, you are talking about corporations, which pay corporate taxes. I don't mind raising corporate taxes, although you may end up shoving companies to Mexico.

  178. Mr. Sanders's health care plan is dependent upon tax receipts from high income taxpayers, yet he bases his funding strategy on the false premise that these same taxpayers will not change their behavior when burdened with a 73% or higher tax rate? As an Enrolled Agent with high income tax clients, I assure you these high income taxpayers will undeniably adjust their behavior to counteract this drastically increased tax burden. Mr. Sanders's health care plan is doomed from the start.

  179. mary--The breadth of authority granted to Enrolled Agents should be considered ( and changed) when the tax code is revised, since there is not a person on earth who needs $10 million dollars a year. Nor any such person who does not have a far greater responsibility to his country and fellow citizens.

  180. Just for the sake of argument let's agree the wealthy have a 'greater responsibility' to pay the full taxes on their income...there sure are a lot of loopholes and programs that would have to be eliminated. And by the time you eliminated those (literally years), do you really believe the wealthy would just let their money sit around so politicians and bureaucrats could figure out ways to tax it?

  181. Bernie's tax plan depends on the people in the middle who are already being squeezed to death by stagnant wages, rising housing costs, childcare, and education, not to mention healthcare. Those of us who actually pay taxes and do not qualify for subsidies for any of our expenses are not okay with being taxed even more. The rich have tax attorneys who specialize in hiding their income to keep their tax rates as low as possible. Anyone making $50K to $500K/1-2 mill is screwed. And before you stay that $500K or even $1 mill is a lot (I don't make anywhere near that amount) keep in mind that in NYC rent/mortgage alone avg bet 3-8K per month. And that's not for Park ave. A 2-3 bdrm in a bad/not so bad neighborhood is 2K+ a month. Then you add in utilities, food, transportation (including ever increasing tolls), childcare, misc, insurance, and taxes, and there is very little left for retirement and the kids education, let alone a nice vaca if you don't make low-mid 6 figures.
    As long as the rich and big corporations can continue to hide money and work the system, the tax system will continue to unfairly take the biggest bite from the middle.

  182. I question the theory that the wealthy will work less if they are taxed too much. This assumes they are like hourly workers who will pass up an hour's overtime if high taxes cut too deeply into take-home pay. But people making more than $10 million are not hourly workers. A highly paid CEO has to work like crazy to make the first $10 million, and can't simply cut back an hour or two a week because the next million isn't worth making. Also, many people with high annual incomes benefit from investment gains that are not affected by the number of hours put in each week. Finally, there are ample examples of rich people who keep on working even though they can't possibly spend the money they already have; they are motivated by something else. And if a few rich folk quit work entirely because of tax rates, there are plenty of people eager to take over, do the job and pay the taxes.

  183. Someone who can invest the money he has was taxed when that money was earned.
    By taxing the profits if there are any when this already taxed income is invested is the equivalent of being taxed twice.
    A guy makes a million.
    He pays seven hundred thousand in tax and invest the amount left in a stock that doubles in price.
    He makes three hundred thousand and you want him taxed another two hundred and ten thousand dollars,
    This is not fair.
    You should be taxed only once and any money made on investing that money should not be taxed.

  184. John, I agree with you regarding not being taxed twice if the person doing the investing needs the money to live on. I would set an income threshold whereby investment for retirement, educational expenses or for those who are otherwise at an income level such that they need the monetary gain to live on are ensured they will not be taxed twice. But anyone making a million who is taxed and then invests ALL of what is left over doesn't fit that category.

  185. You obviously don't understand how this will play out. It won't be the $10M/year earners that will drop out. It is the hourly earners that will eventually learn that they don't have to work because the government will be giving them everything for free that they don't have a need to work. The economy will start to implode starting in the middle class.

  186. A "Democratic Socialist" is a Socialist who has not yet achieved executive powers. The closer Sander's comes to this goal, the more he seems to be willing to embrace his Marxist-Leninist roots and propose hare-brained schemes that would ruin our economy—a second honeymoon in Moscow, as it were. He should be required to read the report, also in today's Times, on the total meltdown in the Venezuelan economy. Hugo Chavez was himself once a democratic socialist! By the way, the effect of increased taxes, at some point, resulting in reduced revenue has long been known as the "Laffer Curve". Josh Barro has apparently forgotten this.

  187. While some of tjhe posters here fear the commies of the past, Barro is essentially a trickle down promoter, and writes from this perspective throughout the article. He subtly alters Saenz statements to indicate fear of loss of productive income by the wealthiest, but the likelihood of this has no basis in history, and Saenz merely shows that this is one potential outcome. Prior to Reagan the upper income tax could be as high as 90%, as it was for almost 50 years before this. Real taxes were usually much less, due to other related tax measures, but 90% never damaged the wealthiests abilities to invest. While Barro is moderate on the subject, the anti commie nuts will do as they try to here, to frighten the majority as they do themselves, over a non issue that has no significant impact on investment. While the discussion in the article does touch on the time periods in which investments are made after various changes in the tax laws, Barro fails to mention that with NO exceptions, there has never been an improvement in investments after taxes were reduced. When Reagan dropped taxes, on several occasions, there was no improvement in the economy. NO trickle down. The Laffer curve, or as we used to say in college, the laughable curve doesn't happen.

  188. Why narrow the focus in an essay like this to the ordinary income tax rate? Most of the 0.1% increase their wealth through capital gains, including hedge fund, private equity, and venture capitalist managers who earn most of their money through the dreaded carried interest loophole. Others who are a part of the "investor class" that rule our plutocracy are in the same boat. Their going capital gains tax rate is 15%. Unless you go into detail about this, it simply makes no sense to conclude that Sanders is "likely to fall short of his revenue estimates, leaving him with less money than he needs to pay for his single-payer health plan."

  189. This article doesn't touch upon the fact that the broad-based income and payroll taxes do not necessarily translate into a higher monetary burden on the majority of workers who are not higher earners. This is due in part to the fact that,in the single-payer health plan that Bernie Sanders is proposing, the vast majority of workers would be freed from paying for the portion of employer-provided health care that they are responsible for now. This would offset, if not positively so, any increase that the majority of workers would see in their taxes. Also, since employers would be freed from paying for the health care that they are now providing their workers, this would provide some incentive for employers to raise wages, which would in turn provide somewhat higher tax revenue.
    I am sure that the same concern was expressed over the newly levied taxes to pay for Social Security when it was being devised, particularly since people would not see the benefit until later in their lives, but most people who are now collecting Social Security are probably not fretting over the taxes they paid over their working lives to pay for it.

  190. More taxes are not the problem. Spending is the problem. Cut government by 75% and focus on the poor and disabled and national defense.

  191. There are really two very simple tax changes that would greatly increase revenue, decrease inequality and have minimal negative impact on economic behavior: 1) eliminate the cap on Social Security income while subjecting capital gains income to the Social Security tax and 2) treat capital gains and ordinary income the same, while keep ordinary rates constant. The former change would put social security on a solid footing for a long time and the later would in fact stop all the non economic contortions individuals, companies and partnerships do to "create" capital gains.

  192. Tax investment income and investments stop. When people are only getting a 5 - 6 % gain on their investments and you add a 5 - 6% tax on this income then the investments stop. The answer is not more taxes, the answer is LESS spending. I don't know what the current number is but probably 15 years ago, 40% of ever dollar going to DC was spent on overhead leaving only 60 cents of every dollar going to the public. I am sure that number is much higher. Washington is completely out of touch with reality and we are spending too much money on unneeded programs. Get back to the basics defined in the constitution and spend money on the poor, the disabled, and national defense. Anything else, including all subsidies should be eliminated. Do away with crony capitalism and cut the government by 75%. That will solve the problem, not continuing to punish the people who are successful.

  193. The first thing the wealthy would do is 'incorporate' themselves in the Bahamas or whatever and pay themselves $1. The above would simply hurt the middle class with the wealthy being as mobile as ever.

  194. What hypothesis. The top marginal tax rate from 1933-1986 was always between 50-94%, from 1986-2016 the top tax rate has been between 28-39.6%.

    The per year growth between 1933-1986 is literally more than double the per year growth from 1986-2016 domestically.

    We have all the data, lower top marginal tax rates do not yield as high levels of economic growth domestically.

  195. I wrote something last year about the effect of higher taxes v's higher interest rates. I was thinking that higher taxes could be progrowth deflationary. The last rate hike dose not seem to have gone over well. I wonder if tax increases could be use instead, particularly if revenues were invested in infrastructure etc.

  196. Ugggh, not that was the NOMINAL rate. Back then there were sooooo many more deductions than now. For example, all interest expense. Not just mortgage interest. All. Bernie wants to close the (fewer than in the 1950s) loopholes AND raise rates. There is literally nothing close to this as a precedent in US history. Denmark, yeah. Not here. Not even close. The top effective marginal rate for the top 1% or whatnot in the US was at most 50%.

  197. People, stop talking about the 90% rate under Ike. Its NOT apples to apples as there were far more deductions than now. Just like now with the nominal corporate tax rate and the effective rate. The actual top marginal tax rates for high earners was much lower than 90%. And Bernie wants to both raise rates and eliminate loopholes. There has never in the history of the U.S., or most Western countries outside of Scandinavia for that matter, been higher effective tax rates than what he is proposing. See this article for an explanation:

    http://www.bloombergview.com/articles/2013-01-02/1950s-tax-fantasy-is-a-...

  198. So, where is the "Economic Hypothesis". It is a proven fact that when you raise taxes you stifle the economy, jobs go away and everyone is worse off. when you lower taxes the economy gets better, people invest more money and there are more jobs so everything is better for everyone. The ONLY people who do worse in a lower tax economy are those who don't want to work or who simply refuse to work and expect everyone else to support them. This has been proven time and again through out history. There is no hypothesis needed. It is why socialism has failed every single time that it has been tried. Like the old saying goes, at some point you run out of everyone else's money. When you have socialism you just grow the dregs of society, it is not profitable to work so, why work? That's also why socialism ALWAYS ends in dictatorship or totalitarianism.

  199. So basically Sanders would be playing with economic fire.

  200. I have yet to see any data about how much money Bernie actually need to implement a single-payer system, and if implemented, what would be done to control the power and costs of such a government program. All I read is "tax the wealthy, give me the money, and we'll figure it out from there". No thank you.

  201. The 0.1% taxes are an outcome, not a goal. The goal is to push more spending power further down the economic ladder. Our economy does it's best when spending power is not constrained, but unleashed, and performs even better when that spending is income fueled, not debt-driven.

    And, as has been pointed out many times, the number of even top 10% people who will say "earning more? Eh?" is fairly thin.

  202. Um... I think your numbers may be flawed here. Payroll taxes wouldn't be new; Sanders would raise the cap so that social security contributions don't max out at such a low point as they do now.

    I believe this piece is using scare tactics over facts. Are there really people who would consider a take-home of 2.7 million dollars a hardship? Especially remembering that their investments are taxed at a lower rate than income?

    Don't let the New New York Times culture of fear tactics get to you, people.

  203. Some claims can be identified as clearly wrong — see, for example, the Tax Foundation’s claim that large across-the-board tax cuts proposed by Marco Rubio would cause revenues to be higher within a decade

    I don't even have to know what the Tax Foundation's claim is in detail to see that this is a pompous know it all statement that cannot be backed up. Clearly wrong? According to whom, you or Krugman, or the 10 hand picked 'public finance economists'? Seriously, look up the meaning of the word 'hubris' or perhaps 'humble', or even 'wrong.' But you're not wrong, are you? Prove it, rather than make an idiotic, unsupportable statement like that.

  204. A hypothesis that has already been disproven by history, more than once. Why do we need to give it another shot? It's the information age. There is no excuse.

  205. Democratic Socialism has the same result over and over again. There is no hypothesis. It's called insanity.

  206. Say my before-tax income is $10 million, and my after-tax income is $5 million. Then say the Sanders plan is going to decrease my after-tax income to $2.5 million. Why is is assumed I'll be LESS entrepreneurial and my before-tax income will therefore decrease? Might I not be MORE entrepreneurial and work HARDER to boost my before-tax income as close to $20 million as I can, to get my after-tax income back close to $5 million?

  207. Mr. Karasiewicz. Well said. This is Sander's version of trickle down economics!

  208. Ever since the cold war ended, the elite of the free world has been squeezing the people. What will stop them from continue doing that, higher tax or WW III?

  209. Straying bit from the tax rate issue, I wonder why the cost of "free" tuition is considered such a big expense, we were essentially there 50 years ago. I graduated from a good public university in 1961 with a four-year degree and ZERO debt. I paid at least 80% of my costs with earnings from summer and vacation jobs, and my parents threw a few hundred dollars in the pot here and there when I came up short. Why can't we get back to that model?

  210. All I know is that in the 50s and 60s, when upper income tax rates were high, the middle class was booming, our infrastructure was the best in the world, AND one income could support a family. Call me crazy, but I liked it then!

  211. if Congress and the Senate votes no it wont make it anywhere! So.. all this speculation is like buying a lottery ticket.. Until the reality hits.. its just a dream.

  212. What is it with the NYT? Two more articles today criticizing Bernie Sanders. The second (Foreign policy related) denigrates him for not having a solution to North Korea's rocket launch the night before. I'd rather have him be right, after serious consideration, on important issues like going to war in Iraq, than to be a Monday morning quarterback with half-baked ideas.
    C'mon, Times, open your mind to the most hopeful political movement in America in decades. Even if he doesn't become President.

  213. Ask for the moon and you might get an asteroid. Bernie is headed in the right direction.

  214. No candidate’s numbers add up without accepting their working assumptions, which are usually implausible to everyone except the candidate.

  215. While many just hate the 'rich' and applaud any and all increases in tax rates on rich people and corporations, the reality is that people and corporations can move at any time. And they do move.

    The US has the highest corporate tax rate in the world. Even Canada lowered their rate to 12% in an effort to encourage movement into Canada.

    One huge problem we also have is that those that are voting and embracing these proposed tax changes are in fact the same people that don't pay Fed. taxes. While I was a fan of eliminating taxes for those making little money back in 2007, I was also a fan of making this temporary. Everyone should pay taxes. Period. Even if the rate were only 8-10% of earned income, they should pay. Right now we have millions under-reporting their earnings, working under the table for cash or ignoring 1099s. That is wrong.

    Now, the idea that our taxes are just too low is ludicrous. What is wrong is the tax code itself - the special interests accommodated, the subsidies given out to those that win the lobbyist 'lottery.' Single payer system? Not going to work well in the US - a very large country with large swaths of rural communities. I watch CMS create new hoops to jump through daily, can't wait to see what we get when they run all of medicine. Doctors and nurses provide care, the rest of the middle men and government bureaucracy contributes no value, just cost and confusion. Single payer will be even worse. Bernie is wrong.

  216. "What if a high tax rate ... discourages them from going into certain high-paying fields in the first place?"

    Hallelujah! Isn't this the point? Right now people see stock traders and corporate raiders (Shkreli), ambulance chasing avaricious lawyers (Ted Cruz) and semi-illiterate, philandering sports players (pick one) as people to look up to -- partly based on their outrageous pay. In realty they are nothing of the sort. What if people reserved their admiration for upper middle income jobs that contribute positively to society -- doctors, educators, researchers, small business owners ...

  217. If only the author would acknowledge the effective take rate on the working poor! It exceeds 88% according to one Bloomberg.com article.

  218. In this country we have the opinion that all people who make lots of money are gifted. There are a good deal who are lucky, connected or related and these people do what they can with their connections and money to get tax policy to favor them. Money controls this country. I wouldn't mind a little disruption to that system by majority people rule rather then majority dollar rule.

  219. I would be happy if the uber rich paid the same tax rate as person making $50,000 a year, but since most of their income is not subject to payroll taxes, that does not occur. Eliminating those loopholes is what the Democrats should focus on, not raising taxes.

    As far as Sander's agenda, which is based on the Democrats taking control of Congress, but falls apart if that does not occur?

    Wishful thinking is not a good basis for governing a nation.

  220. When you figure in payroll taxes, sales taxes real estate taxes on top of what Bernie is proposing not just for the rich, why bother to even work??? Bernie Sanders is a total left wing nut job.

  221. The problem with this article's premise, that higher taxes for top income of rich, has not been tested is false. After record low taxes and lack of regulation led to the great depression, we tested higher taxes on the rich in this country all through the 1940s, 50s and 60's; it resulted in what many refer to as this country's golden years, the building of a world class infrastructure, innovations, a middle class that was the envy of the world. Starting in the 1970's taxes started going down and hitting near record lows under Bush and continue even after a decade of expensive war.

    Time to raise taxes on the richest, time to quit distorting Sanders proposal to add 2.2% payroll to REPLACE much higher health insurance premium deductions. Sanders would SAVE middle class families thousands a year. Only people with TAXABLE income OVER $250,000 a year would start to see progressive increases with only the super rich seeing the big increases. And guess what? They can afford it after decades of saddling the middle class with paying for bailouts, oil spill clean ups, subsidies, etc. while they shelter $ off shore to get out of contributing. Excuse me but enough IS enough.

  222. Agree Les. Poorly discussed and explained article. There is absolutely no example of or description of just how "incomes" might be "less" if taxed too much. The idea that employers would "magically" pay less due to high taxes.....really? Or that folks would avoid extra income to avoid taxes....really? Highly unlikely, even if there was a mechanism. Certainly would boost muni's though!

  223. "One of the ideas Mr. Sanders has advanced - Much higher taxes on the highest earners"

    Assume Sen Sanders, who states the business model of Wall Street is fraud, knows Wall Street bankers have been playing 3 Card Monte with their taxes for some time, with no accountability.

    "We do not assume taxpayers change their behavior" said the policy director for the senator's campaign.

    That is correct. Wall Street Bankers have many "loopholes" to hide their assets and dishonestly file tax returns. They have No Reason To Change. I know because I've seen that trick, have had the Criminal IRS show up at my door asking about my "name" and those of Wall Street colleagues on off-shore accounts in the Channel Islands, of which I had no knowledge, set up by Davis Polk.

    Compound that with the .1% that Sen.Sanders discusses, and we have a lot of illegally hidden money, one assumes. One lawyer who looked at my Wall Street banker husband's tax returns, said "he is amazingly dishonest".

    We don't need fancy economists with their papers to tell us what is "possible" or "impossible". That's academia. We need the IRS to do their job, first and foremost, with top earners.

    Examine documents, crunch numbers.

    Needed is a penetrating examination of the tax returns of the top .001% - bet it won't show "loopholes" or "fancy accountants". Bet it points to secret illegal accounts, fake Swiss trusts, etc.

    Bet it shows corruption and that's not a bad start by any measure.

  224. First, people earning $10M+ per year have access to a catalog of tax breaks that disguise their pretax income, making it look as if they earn much less than $10M. This is how the Mitt Romney-types pay 14% while I get drilled with paying 21.6% of my yearly income in state and federal taxes. So you can stop feeling sorry for them because, if they still show an income higher than $10M after all the breaks currently written into the tax code, they’re earning way, WAY more than $10M per year.

    Second, the wealthy are NOT job creators. If you had a few extra bucks, would you hire someone to sit on your porch and do nothing? Of course not, and the wealthy don’t hire people to sit around and do nothing either. Consumers, the collective mass that buy products and create the need for manufacturing headcount, are the job creators. No commerce equals no jobs.

    Third, those of you living in trailers and worrying about the money you’re convinced you’ll make one day can stop worrying right now and rest assured – you will NEVER be subject to Sanders tax plan for the wealthy.

  225. Your adding in of state taxes is unfair and deceptive. Rich people can move to a different state. And you also don't notice that the high tax rates are after DEDUCTIONS, of which the rich have many. Maybe with Sanders' rates we could get the rich to pay as high a percentage than the rest of us. In order to have a progressive rather than regressive system we must have everyone pay payroll tax on all income.

  226. Does anyone really think the super-rich -- given their complex special tax avoidance loopholes in a rigged system -- will REALLY pay more than a fraction of what they owe? Who are we kidding?

  227. '...a high tax rate not only encourages people to work less, but also discourages them from going into certain high-paying fields in the first place...'

    On what historical data is this assumption based? Capitalism will decide otherwise.

  228. Economics sometimes seems like a fantasy science. The entire idea of a revenue minimizing tax rate is just silly, really. If, for instance there were a large surcharge on NFL salaries are we to believe that there would be a shortage of quarterbacks? And wouldn't these new quarterbacks be paying their taxes? And wouldn't that be revenue for the USGov.?
    The thought that no one would replace Jamie Dimon because of a slightly less incredible compensation package is...Oh, fuggetaboutit!!