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An analysis of Donald Trump’s tax plan by a research institute reveals two interesting points: the U.S. government would get a lot poorer, and the wealthy would get a lot richer.
While the plan cuts taxes for all income levels, the biggest cuts involve the highest-income level, both in dollar terms and as a percentage of income. By 2017, the highest-income 1% of taxpayers would receive a tax cut of 17.5% of after-tax income, and the top 0.1% — those with incomes of over $3.7 million in current dollars — would experience an average tax cut of more than $1.3 million, nearly 19% of after-tax income. In contrast, the lowest-income households would receive an average tax cut of $128, or 1% of after-tax income, in Trump’s plan. Overall, on average, the proposal would would cut income taxes by around $5,100 per person, or about 7% of after-tax income.
Actually, it does no such thing; it’s a gimmick that is entirely useless except as a deceptive advertisement for Hillary Clinton. As a gimmick, it’s pretty simple. You put in your annual income (actually, your “expanded cash income,” which you probably don’t know even if you know what it is), whether you’re single or married and whether you have no kids, one kid, or two or more kids. And then it tells you what Donald Trump’s, Ted Cruz’s, Hillary Clinton’s and Bernie Sanders’ “plans mean for your federal tax liability.”
“Pay $5,110 more”—holy smokes! Stop the revolution, I want to get off! Why didn’t someone (besides Vox’s Alvin Chang) tell me that “Sanders wants to implement massive increases across the board, including on the poor”? Maybe because he doesn’t—and you wouldn’t pay $5,110 more, or anything like it.
Mostly, that big number you get for the Sanders tax hike when you plug in your income is the payroll tax that employers will pay to cover the cost of a single-payer healthcare system. As the Tax Policy Center, which worked with Vox to create the calculator, explains:
We’re including payroll taxes, excise taxes and corporate income taxes as well as individual income taxes…. Most economists think employers pass their share of the tax on to workers in the form of lower wages.
With all due respect to most economists, this is dubious. Unless you work at the rare enterprise that does not have profit as its primary goal, your bosses are already paying you as little as they think they can get away with. If they get a new cost associated with your employment, they may try to raise their prices. They may look for other areas where they can cut costs. They may even decide that they can no longer afford to employ you. But what they won’t do is suddenly realize that they could have been paying you thousands of dollars less all along without you quitting. (They may even be forced to accept a lower profit rate, though that’s something “most economists” seem to exclude a priori.)
But that’s not even the real problem with Vox’s calculator. Sanders’ plan is based on using a new payroll tax to pay for a single-payer healthcare system, which will relieve businesses of the considerable burden of paying for employee healthcare. Since just about everyone agrees that single-payer is cheaper than what we have now (including Ezra Klein, before Sanders started running against Clinton on a single-payer platform), in theory business as a whole should come out ahead. But certainly you need to take into account that business would be getting a big break on expenses at the same time that it’s getting a new tax, right?
originally posted by: ketsuko
a reply to: MystikMushroom
Well VOX is a left leaning site, so it has no reason whatsoever to make Bernie look bad.