How Democrats Want to Tax the Rich
Democrats are leading the 2020 presidential campaign with a slew of tax-the-rich proposals, representing a tone change revealing a party moving to the left.
The plans emerge as a bevy of Democratic contenders are trying to catch fire in a party that is unified in its hopes of defeating Trump next year. They are looking to ride a wave that reclaimed the House of Representatives for the party last November, and swept many unabashed progressives into office.
The ideas—ranging from annual millionaire taxes to levies on Wall Street trades—are the source of much-needed revenue to fund big-picture progressive ideas, including Medicare for all and free college tuition. The candidates' ideas of who should be taxed and how much they should pay are slated to be a key differentiator as they vie for their party's nomination.
2020 Presidential Candidates
Tax proposals from the 2020 Democratic hopefuls. Click to scroll to proposal details.
Other Prominent Democrats
They are not running in the 2020 election, but their recommendations might influence the candidates. Click to scroll to proposal details.
Kirsten Gillibrand
Democratic Senator from New York
PROPOSAL
Levy a 0.5 percent tax on stock trades, and a 0.1 percent tax on bond trades.
WHAT'S IN PLACE NOW
Nothing comparable.
ANALYSIS
Gillibrand has signed on as a co-sponsor of Bernie Sanders's bill, which proposes to tax stock trades at 0.5 percent, and bond trades at 0.1 percent.
Among likely voters, 42 percent would support a financial transaction tax, according to a survey conducted between April and May 2018.
- Disapprove
- Don't know
- Approve
Kamala Harris
Democratic Senator from California
PROPOSAL
Provide tax credits and direct payments to middle-income and low-income families by rolling back tax breaks for those making more than $100,000. Tax banks with more than $50 million in assets.
WHAT'S IN PLACE NOW
Low-income workers can claim the earned-income tax credit. The amount of the credit depends on how much one earns and how many children they have. The maximum income level to be eligible for the credit is about $55,000 for those who are married with three or more children.
ANALYSIS
The plan would cut taxes for middle earners, something Democrats have said Republicans didn't do enough of in their 2017 overhaul. However, Harris's plan is likely to cost more than $2.5 trillion, meaning she would need additional revenue raisers to fully pay for it.
Bernie Sanders
Independent Senator from Vermont
PROPOSAL
Set a 45 percent tax on the value of estates between $3.5 million and $10 million, increasing gradually to 77 percent for amounts more than $1 billion. Levy a 0.5 percent tax on stock trades, and a 0.1 percent tax on bond trades.
WHAT'S IN PLACE NOW
Current estate tax kicks in when an estate is worth about $11 million.
ANALYSIS
Sanders's expanded estate tax would tax more of an estate as it is handed down to the next generation. It has been successfully branded as the "death tax" by its opponents. The tax on financial products he has proposed would increase the cost of trades, and would likely curb high-frequency trading which critics say has contributed to market volatility.
Half the country supports the estate tax proposal, according to a poll conducted in February 2019.
- Disapprove
- Don't know
- Approve
Elizabeth Warren
Democratic Senator from Massachusetts
PROPOSAL
Levy a 2 percent tax on households with wealth above $50 million, and a 3 percent tax for those with wealth above $1 billion.
WHAT'S IN PLACE NOW
Nothing comparable.
ANALYSIS
Supporters say the tax would curb inequality. Critics say valuing private assets would create an administrative nightmare for the IRS.
More than 60 percent of Americans would favor a wealth tax, according to a survey conducted in February 2019.
- Disapprove
- Don't know
- Approve
Alexandria Ocasio-Cortez
Democratic Representative for New York 14th District
PROPOSAL
Income over $10 million would be taxed at 70 percent.
WHAT'S IN PLACE NOW
The current top rate is 37 percent on income above $500,000.
ANALYSIS
The tax would increase the top tax brackets to a level not seen since the 1970s. It would do less to slow income inequality, as most top-earners get their income in the form of lower-taxed capital gains rather than wages.
Forty-five percent of Americans would support such a measure, according to a survey conducted in February 2019.
- Disapprove
- Don't know
- Approve
Ilhan Omar
Democratic Representative for Minnesota 5th District
PROPOSAL
The maximum marginal tax rate would be set at 90 percent.
WHAT'S IN PLACE NOW
The current rate is 37 percent on income above $500,000.
ANALYSIS
The tax would go beyond many other proposals to increase levies on top earners. Opponents say taxes that approach 100 percent discourage people from expanding their businesses or innovating beyond a certain point. There are currently no estimates of how much money this tax would raise.
Brian Schatz
Democratic Senator from Hawaii
PROPOSAL
The financial trading tax would levy a 0.1 percent tax on trades of stocks, bonds and derivatives.
WHAT'S IN PLACE NOW
Nothing comparable.
ANALYSIS
The tax would limit the amount of high-frequency trading, but critics say it could decrease liquidity in financial markets.
Among likely voters, 42 percent would support a financial transaction tax, according to a survey conducted between April and May 2018.
- Disapprove
- Don't know
- Approve
What Americans think of taxes
Since 2016, Americans' views on taxes have evolved. Where 16 percent of them used to think that corporate taxes were fair, 24 percent now think so.
In addition, Americans' perception of their own income tax has changed over the last two years: 45 percent now think they are paying too much in taxes, against 57 percent in 2016.
Americans' Views on Taxes
- Too much
- Fair
- Not enough
Editor: Mira Rojanasakul
Sources: Revenue estimates are from the candidates. For Alexandria Ocasio-Cortez, the estimate comes from Wharton School at the University of Pennsylvania. For Brian Schatz, the estimate comes from the Congressional Budget Office. Rest of the data compiled by Bloomberg.
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