Bernie Sanders is yesterday’s news.
Yes, he’s still lovable ol’ Crazy Bernie, but he’s now being overshadowed by Congresswoman Alexandria Ocasio-Cortez, another out-of-the-closet socialist who somehow thinks America should be more like Greece or Venezuela.
Brian Riedl of the Manhattan Institute opines in National Review about AOC’s proposed tax hike on the rich. He starts with a very appropriate economic observation.
A 70 percent tax bracket would raise very little (if any) revenue, while damaging the economy and sending income and jobs overseas.
He then points out that we should look at both sides of the fiscal ledger.
And the spending side of the left’s ledger is very crowded and very heavy.
…when assessing the needed tax revenues, a green-energy initiative costing $7–$10 trillion over the decade should be examined in the context of $42 trillion in additional Democratic-socialist proposals that include single-payer health care ($32 trillion),
a federal jobs guarantee ($6.8 trillion), student-loan forgiveness ($1.4 trillion), free public college ($800 billion), infrastructure ($1 trillion), family leave ($270 billion), and Social Security expansion ($188 billion). …These spending promises are so stratospheric as to be incomprehensible — except to the far Left, which clings to the myth that simply taxing millionaires can finance a level of socialism that would make the Swedes start a tea-party movement.
Here’s the key part of Brian’s column.
He points out that there’s no way to finance the agenda of Democratic Socialists with class-warfare taxes. Even if the AOC tax plan is dramatically expanded.
…a 100 percent tax rate on all income over $1 million…would raise 3.8 percent of GDP — not even enough to balance the current budget, much less finance a Green New Deal. And even that figure implausibly assumes that people continue working and investing. Slightly more realistically, doubling the top 35 percent and 37 percent tax brackets, to 70 percent and 74 percent for singles earning more than $200,000 and couples earning at least $400,000, would raise roughly 1.6 percent of GDP. That figure also ignores all revenues lost to the economic effects of 85 percent marginal tax rates (when including state and payroll taxes) as well as tax avoidance and evasion. …limiting the 70 percent tax bracket to incomes over $10 million…would raise only 0.25 percent of GDP — about $50 billion annually. …$50 billion is surely too high of an estimate, because the kind of people with incomes over $10 million also have teams of accountants and tax lawyers finding every conceivable tax loophole and overseas income shift.
Everything we know about the real-world impact of tax policy tells us that these soak-the-rich taxes won’t raise much – if any – revenue for the simple reason that upper-income taxpayers will alter the timing, level, and composition of their income.
But, as Brian noted, these taxes wouldn’t come close to financing the leftist wish list even if one makes absurd assumptions that behavior doesn’t change and the economy is unaffected.
So how do European nations finance their large welfare states?
Europe finances its generous welfare states through steep value-added taxes that hit the entire population. …Increasing federal spending by 21 percent of GDP to fund Democratic socialism — even after slashing defense — would require either a 55 percent payroll tax increase, or 115 percent value-added tax, according to CBO data. Acknowledging this brutal middle-class burden would immediately end any public flirtation with “free-lunch socialism.”
This is the most important takeaway from the column.
And it’s something that I’ve noted as well. On more than one occasion.
If you want European-type handouts, you better be prepared to cough up a lot of money.
- Onerous value-added taxes.
- Punitive payroll taxes.
- And income taxes that impose high rates on modest incomes.
Simply stated, there is no way to finance a European-sized welfare state without pillaging middle-class and lower-income taxpayers.
Which helps to explain why European living standards are significantly below American levels.
By the way, there one final point from Brian’s column that is worth sharing.
He explains that high tax rates in the 1950s, 1960s, and 1970s didn’t generate much revenue. Even from the rich.
A common liberal retort is that the economy survived 91 percent income-tax rates under President Eisenhower and 70 percent tax rates through the 1970s. That does not mean those policies raised much revenue. Tax exclusions and high income thresholds shielded nearly everyone from these tax rates — to the degree that the richest 1 percent of earners paid lower effective income-tax rates in the 1950s than today. In 1960, only eight taxpayers paid the 91 percent rate. Overall, today’s 8.2 percent of GDP in federal income-tax revenues exceeds that of the 1950s (7.2 percent), 1960s (7.6 percent), and 1970s (7.9 percent). Those earlier decades were not a tax-the-rich utopia.
Amen.
I made similar points back in 2017.
The bottom line is that Alexandria Ocasio-Cortez’s economic agenda cannot be justified when looking at economic data, fiscal data, and historical data.
But we can say with great confidence that ordinary people ultimately will pay the heaviest price if her proposals get enacted since her class-warfare tax hikes will be a precursor for huge tax increases on the rest of us.
[…] been warning, over and over and over again, that a European-style welfare state means huge tax […]
[…] been warning, over and over and over again, that a European-style welfare state means huge tax […]
[…] been warning, over and over and over again, that a European-style welfare state means huge tax […]
[…] such as Alexandria Ocasio-Cortez and Bernie Sanders would like us to believe the answer involves never-ending tax […]
[…] such as Alexandria Ocasio-Cortez and Bernie Sanders would like us to believe the answer involves never-ending tax […]
[…] Both numbers are far too high, of course, but setting some sort of limit would at least show that there is some long-run difference between the rational left and the AOC crowd. […]
[…] turns out that higher taxes are not very popular, notwithstanding the delusions of Bernie Sanders, AOC, and the rest of the class-warfare […]
[…] turns out that higher taxes are not very popular, notwithstanding the delusions of Bernie Sanders, AOC, and the rest of the class-warfare […]
[…] turns out that higher taxes are not very popular, notwithstanding the delusions of Bernie Sanders, AOC, and the rest of the class-warfare […]
[…] Both numbers are far too high, of course, but setting some sort of limit would at least show that there is some long-run difference between the rational left and the AOC crowd. […]
[…] made this same point, over and over […]
[…] been warning, over and over and over again, that a European-style welfare state means huge tax […]
[…] Both numbers are far too high, of course, but setting some sort of limit would at least show that there is some long-run difference between the rational left and the AOC crowd. […]
[…] Both numbers are far too high, of course, but setting some sort of limit would at least show that there is some long-run difference between the rational left and the AOC crowd. […]
[…] Both numbers are far too high, of course, but setting some sort of limit would at least show that there is some long-run difference between the rational left and the AOC crowd. […]
[…] been warning, over and over and over again, that a European-style welfare state means huge tax […]
[…] been warning, over and over and over again, that a European-style welfare state means huge tax […]
[…] been warning, over and over and over again, that a European-style welfare state means huge tax increases on ordinary […]
[…] version (nominal private ownership but government control), or the Bernie/AOC version (confiscatory taxation and pervasive […]
[…] production), the fascist version (nominal private ownership but government control), or the Bernie/AOC version (confiscatory taxation and pervasive […]
[…] nonsensical. Simply stated, there are not enough rich people and they don’t earn enough money (and they have […]
[…] nonsensical. Simply stated, there are not enough rich people and they don’t earn enough money (and they have […]
[…] nonsensical. Simply stated, there are not enough rich people and they don’t earn enough money (and they […]
[…] like having better parents is a source of genuine unfairness. Yet not even Bernie Sanders or AOC have proposed taxes to equalize those sources of real […]
[…] such as Alexandria Ocasio-Cortez and Bernie Sanders would like us to believe the answer involves never-ending tax […]
[…] two ways of dealing with the cost spiral. One option is huge tax increases, which would result in a massive, European-style tax burden on the lower-income and middle-class […]
[…] two ways of dealing with the cost spiral. One option is huge tax increases, which would result in a massive, European-style tax burden on the lower-income and middle-class […]
[…] two ways of dealing with the cost spiral. One option is huge tax increases, which would result in a massive, European-style tax burden on the lower-income and middle-class […]
[…] her track record, I’m not surprised that Ocasio-Cortez has embraced this punitive […]
[…] Sounds more like Bernie Sanders or Alexandria Ocasio-Cortez rather than a religious […]
[…] such as Bernie Sanders and Alexandria Ocasio-Cortez say that their goal of “democratic socialism” is very different from the socialism of […]
[…] around the world for insights and evidence about the ideology championed by Bernie Sanders and Alexandria Ocasio-Cortez (h/t: James […]
[…] if we adopt the expanded welfare state envisioned by Bernie Sanders, Alexandria Ocasio-Cortez, and Kamala Harris, the same thing will happen to American […]
[…] other words, the middle class will pay a lot more if AOC’s scheme is ever […]
[…] Somin warns that the Sanders/AOC agenda would push America way to the left of the Nordic […]
[…] don’t think either Senator Bernie Sanders or Representative Alexandria Ocasio-Cortez actually understand that socialism is an economic system based on government ownership of the means […]
[…] global evidence confirms that ordinary people will be the ones paying the tab if Crazy Bernie and AOC succeed in expanding the burden of government spending in America. Though they’re not honest […]
[…] not even Bernie Sanders or AOC has proposed taxes to equalize those sources of real unfairness (since I don’t want to give […]
[…] means stifling taxes on lower-income and middle-class taxpayers. This is the point I’ve made, over and over […]
[…] this Crazy Bernie/AOC approach, Sweden is to the right of the line and is socialist but (perversely) Venezuela […]
[…] ways of dealing with the cost spiral. One option is huge tax increases, which would result in a massive, European-style tax burden on the lower-income and middle-class […]
[…] ways of dealing with the cost spiral. One option is huge tax increases, which would result in a massive, European-style tax burden on the lower-income and middle-class […]
[…] two ways of dealing with the cost spiral. One option is huge tax increases, which would result in a massive, European-style tax burden on the lower-income and middle-class […]
[…] Florida’s better policy means more jobs and more opportunity (sadly, Rep. Ocasio-Cortez has learned nothing from her mother’s […]
[…] such as Alexandria Ocasio-Cortez and Bernie Sanders would like us to believe the answer involves never-ending tax increases. But […]
[…] we may need a special section for Congresswoman Alexandria Ocasio-Cortez and her vapid – yet earnest – smiley-face […]
[…] in the New York Times. He starts by observing that politicians such as Bernie Sanders and Alexandria Ocasio-Cortez are demonizing the […]
[…] rich wouldn’t even pay for a tiny fraction of the multi-trillion dollar cost (in other words, you and me would be […]
[…] This is a point I have frequently made, most recently when writing about Alexandria Ocasio-Cortez’s statist agenda. Ordinary taxpayers will pick up most of the tab if […]
[…] Bernie Sanders in the last presidential race and the more-recent instant-celebrity status of Representative Alexandria Ocasio-Cortez, some are wondering if the United States is about to enter a “socialist […]
[…] confession by Shaich. I wonder if we’ll ever see Bernie Sanders of Alexandria Ocasio-Cortez admit socialism doesn’t make […]
[…] nothing else, Alexandria Ocasio-Cortez gives me a lot to write about…and to laugh […]
[…] Laffer Curve also is very important when looking at proposals (such as the nutty idea from Alexandria Ocasio-Cortez) to increase tax rates on the rich. That’s because upper-income […]
“The Worst of Alexandria Ocasio-Cortez Part 2”
Why do you assume that the people who are threatening to destroy our economy are idiots who don’t know what the logical consequences of their policies are? Consider another possibility, their actual intention is no to help the poor, but to destroy our free market economy, and the society that it creates.
Consider this, Chavez took the richest country in South America, and preached resentment to 51% of the people: first to win control democratically, and then, with the help of the Cubans, to destroy the economy. Maybe that was the plan from day one.
Millions of Venezuelans have now been forced to abandon their property to the Communists, who control the elections and the military. Isn’t this what happened in Cuba when it was the richest country in Latin America, after Castro outlawed private business and private property?
Thanks for the wonderful Libertarian Lecture on how things “are sposed to be.” Haven’t you noticed that Brazil just recovered from a dose of Lula and Dilma, and voted for General Pinochet?
Don’t you understand how the revolution works?
It’s sad that we are forced to have this discussion. Evidently some people never learn. It’s even more disconcerting that these people are elected to Congress.
Big government is expensive. Only workers (producers) pay for government. Most workers (producers) are middle class. That is the reality.