Pages

October 29, 2015

Chris Christie says Bernie Sanders’s plan is 'to raise your taxes to 90 percent'

New Jersey Gov. Chris Christie drew chuckles at the Republican presidential debate in Boulder, Colo., when he described the Democratic field as consisting of "a socialist, an isolationist and a pessimist -- and for the sake of me, I can’t figure out which one is which."
He went on to single out Sen. Bernie Sanders of Vermont, one of those three Democratic candidates and a self-described democratic socialist.
"The socialist says they’re going to pay for everything and give you everything for free, except they don’t tell you they’re going to raise your taxes to 90 percent to do it," Christie said.
That echoed a claim made by Donald Trump at a rally in Richmond, Va., on Oct. 14, 2015.
At that rally, Trump called Sanders a "communist" and said that tax hikes would come for everyone, not just billionaires.
"This maniac that was standing on (Hillary Clinton’s) right is giving everything away, so she’s following," Trump said at the Richmond rally, referring to the Democratic debate the previous night. "He’s gonna tax you people at 90 percent. He’s gonna take everything. And nobody's heard the term communist, but you know what? I’d call him a socialist/communist, okay? ‘Cause that's what he is."
There’s no doubt that Sanders wants to raise taxes on the richest 1 percent:
"Yes, we are going to ask Trump and his billionaire friends to pay more in taxes. ...We'll come up with that rate. But it will be a damned lot higher than it is right now," Sanders said in an Oct. 18 interview with ABC’s This Week.
But does Sanders want to tax the average Americans at 90 percent as well? Here, we’ll recap the problems we found with Trump’s claim and address why Christie’s claim was equally problematic.
What Sanders has said
Sanders hasn’t released a tax plan yet -- the nonpartisan Tax Policy Center has a summary of the candidates’ tax plans here -- and we searched Lexis Nexis and CQ and found that Sanders has never explicitly proposed a 90 percent tax rate for billionaires, let alone applying that rate across the board.
The confusion may stem from comments Sanders made in May 2015 about the marginal tax rate for the very wealthy. In an interview with CNBC, Sanders he doesn’t think a top marginal tax rate of 90 percent is too high.
Before we parse his comment, let’s review what the marginal tax rate means. It’s the tax rate that’s applied to the last dollar you earn. The U.S. tax system is based on tax brackets. Let’s say you were a single filer who earned $410,000 in adjusted gross income last year. The first $9,075 you earned was taxed at 10 percent, the amount from $9,076 to $36,900 was taxed at 15 percent, the amount from $36,901 to $89,350 was taxed at 25 percent, the amount from $89,351 to $186,350 was taxed at 28 percent, the amount from $186,351 to $405,100 was taxed at 33 percent, the amount from $405,101 to $406,750 was taxed at 35 percent, and the amount above $406,751 was taxed at 39.6 percent. (The dollar levels are different for other types of filers, such as couples filing jointly.)
In other words, the current top marginal tax rate is 39.6 percent, affecting individuals who make more than $400,000 a year. That’s roughly the threshold to make it into the top 1 percent of incomes if you’re filing as an individual. And even for this sample filer making $410,000, that 39.6 percent tax rate hits only a relatively small amount of their income. The average American never sees marginal federal income tax rates that high.
"If my memory is correct, when radical socialist Dwight D. Eisenhower was president, the highest marginal tax rate was something like 90 percent," Sanders said on May 26. (His memory is correct.) "That's not 90 percent of your income, you know? That's the marginal."
Many on the right and left interpreted Sanders’ comments as advocating for increasing the top rate to 90 percent. The Sanders camp, however, told us the Vermont senator has made it very clear that that’s not what he was saying.
And beyond what his camp told us, a review of his past comments — one from 2008, and four more from this year — Sanders doesn’t seem like he’s committed to any figure:
• Nov. 5, 2008 on Fox News’ Your World with Neil Cavuto: Sanders said of the top tax rate, "No, of course, it is not going to be 90 percent." Pressed by Cavuto for a figure, Sanders said, "Neil, I’m not going to develop tax policy in a three-minute segment on your show."
• June 2, 2015 on Yahoo! News: In response to host Katie Couric’s suggestion that he proposed taxing the wealthiest Americans at 90 percent, Sanders interjected, "No, I didn’t. It’s not true. That’s one of these things that seems to be circulating. We haven’t come up with a formal tax proposal. ...Will we raise the individual tax rate for the wealthy? Absolutely, but we haven’t come up with a number yet."
• June 11, 2015 on Charlie Rose: "We are working right now on a comprehensive tax package which I suspect will for the top marginal rates go over 50 percent."
• Sept. 18, 2015 on CBS This Morning: "No, I don’t think you have to go up to 90 percent. …I don’t know if you have to go there but we will come up with some very specific ideas."
• Sept. 23, 2015 on CNN New Day: "If you are extremely wealthy, yes, you are going to pay more in taxes. If you are a large corporation today, by the way, that's stashing your money in the Cayman Islands and not paying a nickel in federal taxes, yes, you are going to be paying taxes."
In short, the most specific figure we found from Sanders on the top marginal tax rate is not terribly specific — "over 50 percent" — and it would only affect a tiny fraction of Americans.
Nothing is certain but taxing corporations
And that’s the point that’s even more problematic with this claim -- who Sanders’ supposed 90 percent tax would affect.
Both Trump and now Christie have indicated that essentially everyone will be hit by a 90 percent tax hike. With Trump, this rate would supposedly be levied on "you people" in the audience at his rally. Christie, for his part, said Sanders would "raise your taxes to 90 percent."
But whatever big hike a President Sanders would seek to implement -- and based on his comments it would be something south of 90 percent -- would be targeted mostly at the wealthiest Americans, including hikes to the tax on the largest estates and on trading transactions and an elimination of tax deferrals for U.S. corporations located abroad.
The one exception is his call for paid family and medical leave, based on legislationintroduced by Sen. Kirsten Gillibrand, D-N.Y., that would require "just a small increase in the payroll tax" that would hit everyone, Sanders said on This Week.
How small? Employers and employees would chip in an additional 0.2 percent each, bringing the federal payroll tax from 12.4 percent to 12.8 percent. According to areport by Gillibrand’s office, that’s the equivalent of $72.04 per year for the average worker, and $227.40 for the highest wage earners.
Beyond this, there’s some doubt that Sanders could achieve his policy proposals without additional tax increases. Indeed, one tax expert cautioned against speculating because Sanders has been so vague about his proposals.
"There is not enough substance to (Sanders’) proposals for anyone to have analyzed them," Roberton Williams of the nonpartisan Tax Policy Center said when we checked Trump’s original claim. "Organizations typically wait until there is a fully formulated plan before they try to model them. Sanders is not anywhere near that point yet."

No comments:

Post a Comment