Bernie Sanders' Wealth Tax Would Be Bad For Workers
The Vermont socialist has always claimed to be a champion of the working class. But over time, his wealth tax would fall heavily on ordinary Americans.
Over the last several weeks, Sen. Bernie Sanders (I–Vt.) has risen to the top of the Democratic presidential polls in key early states. It is plausible that he will win both the Iowa caucus next week and the New Hampshire primary a week later.
Sanders recent rise is the culmination of a lifetime in politics preaching democratic socialist ideals. And although the particulars of his political vision have shifted in largely unacknowledged ways over time, one throughline has remained remarkably consistent: Sanders has always pitched himself as being a champion of the working class.
Yet Sanders has proposed a major new tax on wealth that, over time, would come to be paid mostly by workers, depriving them of more than a trillion dollars in wages. Sanders' plan to help the working class would, instead, make the working class worse off.
Sanders has touted himself as pro-worker and pro-middle class throughout his presidential campaigns. "This campaign," he said in 2015, "is about the struggling middle class." In a speech defending socialism last year, he warned about the dangers of wealth-fueled oligarchy. "It is not just that the very rich are getting much richer. It is that tens of millions of working-class people, in the wealthiest country on earth, are suffering under incredible economic hardship, desperately trying to survive." Sanders' message has been consistent and clear. If he is president, the wealthy will have less, and the working class will have more, in the form of new social spending funded by taxing the rich.
To that end, Sanders has proposed taxing not only the income of the very well off, but their wealth, in the form of a tax that starts at 1 percent annually on married couples with net worths of $32 million and increases to an 8 percent annual tax on wealth above $10 billion.
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Strictly speaking, the Sanders wealth tax would be paid only by a relatively small number of wealthy families and individuals. But that doesn't necessarily reveal the full extent of the tax's impact on the broader economy. And according to a recent study by former Congressional Budget Office director Douglas Holtz-Eakin and Gordon Gray, both of whom are now affiliated with the conservative policy organization American Action Forum (AAF), the effects of a wealth tax would extend throughout the economy, reducing the supply of capital and decreasing investment, which would negatively impact worker pay.
Sanders' wealth tax would cost workers about $1.6 trillion over a decade, they estimate. Over time, as the impact of the tax grew, workers would end up implicitly shouldering about 63 percent of the burden. The wealthy would indeed have less wealth, but workers would come out behind as well. Sanders, the champion of the working class, would effectively be taxing the working class he claims he wants to support.
https://reason.com/2020/01/28/bernie-sanders-wealth-tax-would-be-bad-for-workers/
