Reminder: You can't fund the left's agenda on the backs of the rich

Last week the Heritage Foundation published an analysis looking at what it would take to fund the progressive agenda, i.e. Medicare4All, free college, and either a job guarantee or some kind of Universal Basic Income. The paper concludes that it’s not possible to fund this agenda, not even if you take 100% of the income of everyone earning above $200,000 a year.

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There’s been a lot of disagreement about the cost of these proposals. Another group published an estimate of the cost of the Green New Deal back in February and came up with the figure $93 trillion over ten years. Progressives reacted like vampires hit with a combination of sunlight and crosses. How dare someone try to estimate costs from a resolution that doesn’t even spell out any specific policies!

What Heritage does is break their analysis into two categories: a high estimate of $92 trillion and a low estimate of $48 trillion. In both cases the conclusion is roughly the same: US government spending would leap to third highest in the world (low estimate) or highest in the world by far (high estimate):

If the progressive agenda were to be implemented, then using lower-bound estimates, government spending in the U.S. would be higher than all other industrialized countries except Finland and France. If using the higher estimates based on more expansive programs and less conservative assumptions, then government expenditures in the U.S. would dwarf those in any other developed country.

Bernie Sanders, Elizabeth Warren, and other progressives always assure us we can pay for their proposals by taxing the rich. But Heritage ran the numbers. It turns out that even if you created a 100% flat tax on the wealthy, you can’t even reach the low-cost estimate:

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Data from the Internal Revenue Service Statistics of Income show that imposing a 100 percent flat tax with no zero bracket amount on those with incomes of $1 million or more would increase federal revenues by about $986 billion annually. This figure is simply adjusted gross income less taxes paid for taxable year 2016. It means confiscating every dollar not currently taken by federal income taxes for those with an AGI of $1 million or more. Thus, a policy of confiscating all earnings of those with incomes over $1 million would not even eliminate the federal deficit, currently about $1.1 trillion annually—let alone pay for utopian progressive causes. This figure reflects taxation of all income, including the first $1 million, at 100 percent and does not consider federal payroll taxes or state and local income, property, and sales taxes (approximately $106 billion) already paid by this group.

Confiscating all remaining after-tax income of those with incomes of $500,000 or more would increase federal revenues by about $1.4 trillion annually. This assumes confiscation of their first $500,000 in earnings as well. This is enough to eliminate the federal deficit but not a great deal more. If, however, the federal government were to confiscate all remaining after-tax incomes of those earning $200,000, that would increase federal revenues by $2.7 trillion annually.

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Obviously, if you confiscated 100% of earnings that would have a dramatic impact on the behavior of the people earning that money. Why work if you don’t benefit from it? So it seems extremely unlikely you’d be able to keep this scheme going for 10 years and keep collecting the same amount. However, even if you assume that were possible, it wouldn’t be enough:

Multiplying the annual amounts by 10 to achieve an imaginary 10-year revenue increase would result in the following figures:

Thus, confiscating all income of all taxpayers earning $200,000 or more would only fund somewhat over half of the progressive agenda using the lower cost estimates from Chart. Using the higher cost estimates, a 100 percent federal tax on all taxpayers earning $200,000 or more would only fund 29 percent of the progressive agenda.

Here’s the bottom line:

The European experience with large welfare states demonstrates that socialist or highly progressive policies must be funded by imposing very high consumption, payroll, and income taxes on the middle class. Notwithstanding the “tax the rich” rhetoric from progressive and socialist politicians, there simply is no alternative to dramatically raising middle-class taxes if the progressive agenda is to be implemented.

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This is something I’ve written about before. Despite the reality of this being so clear that even Vox agrees, you almost never hear the leading progressives pushed to admit that their policies would require massive tax increases on the middle-class. Rep. Alexandria Ocasio-Cortez doesn’t even try to explain how she would pay for her policies anymore. After trying and failing to explain it she now just says we can’t afford not to fund her priorities. But these policies would be a lot less popular if people were frequently reminded there’s a significant cost associated with them, one that won’t just fall on the well-off.

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Beege Welborn 5:00 PM | December 24, 2024
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