Tag Archives: Tax Increase

Bernie Sanders says his spending proposals will tax everyone, not just the rich

Wall Street Journal calculates cost of Sanders spending plan
Wall Street Journal calculates the cost of Bernie Sanders’ spending plan

This story is from ABC News.


Sanders is perhaps best known in political life for his efforts to champion the middle class, saying that in order to bridge the widening wealth and income inequality gap in America, the country needs a revamped tax policy that forces Wall Street, big corporations, millionaires and billionaires –like Trump – to pay up – and doesn’t impose further taxes on the middle and working class.

However, when pressed by Stephanopoulos about whether the proposed Senate tax legislation he backs, which would use a payroll tax to fund a mandate for 12 weeks of paid family and medical leave from all U.S. employers, Sander confirmed that the bill would require taxing all citizens -– not just the top 1 percent.

“[The payroll tax] would hit everyone –- yeah, it would. But it would mean we would join the rest of the industrialized world and make sure that when a mom has a baby she can in fact stay home with that baby for three months, rather than going back to work at the end of one week,” Sanders said.

What most Democrats (all?) don’t understand, is that when you tax the rich, the costs filter down to consumers and employees. If a company is making a 5% profit (and Wal-mart makes a 3% profit), then slapping even a 5% tax increase on them will cause layoffs, outsourcing and other repercussions. We have a serious problem in this country with economic illiteracy – a widespread lack of familiarity with how the private sector works, and how jobs are created. For one thing, the public thinks that the average profit margin of companies is over 32%, when it fact it is much lower.

Public perceptions of corporate profit margins
Public perceptions of corporate profit margins

So the real question is, how much does Bernie Sanders want to spend, and pass on to “the rich”? Because if it’s more than a 1% or 2% increase in corporate taxes, we are all – all of us – going to feel the burn. And it’s not going to a slight increase to our payroll taxes, it’s going to be a huge number of people losing their jobs, and the prices of consumer goods and services rising to pay for the new taxes.

How much does all this Bernie Sanders spending cost? 

The Wall Street Journal – which knows something about business and economics – has done an analysis of how much the socialist agenda of Bernie Sanders will cost. The final price tag? $18 trillion dollars!

Read it:

Sen. Bernie Sanders, whose liberal call to action has propelled his long-shot presidential campaign, is proposing an array of new programs that would amount to the largest peacetime expansion of government in modern American history.

In all, he backs at least $18 trillion in new spending over a decade, according to a tally by The Wall Street Journal, a sum that alarms conservatives and gives even many Democrats pause. Mr. Sanders sees the money as going to essential government services at a time of increasing strain on the middle class.

[…]To pay for it, Mr. Sanders, a Vermont independent running for the Democratic nomination, has so far detailed tax increases that could bring in as much as $6.5 trillion over 10 years, according to his staff.

A campaign aide said additional tax proposals would be offered to offset the cost of some, and possibly all, of his health program. A Democratic proposal for such a “single-payer” health plan, now in Congress, would be funded in part through a new payroll tax on employers and workers, with the trade-off being that employers would no longer have to pay for or arrange their workers’ insurance.

Investors Business Daily has more to say about Sanders’ proposals:

His “Medicare for All” single-payer health plan alone would cost roughly $15 trillion over a decade.

He wants the government to provide “universal” child care and pre-kindergarten programs, along with free tuition at any public college, and proposes spending an additional $1 trillion on infrastructure and expanding Social Security by $1.2 trillion. Add up just these and a few other items on Sanders’ list, and price tag tops $18 trillion over a decade.

[…]And this doesn’t count the massive costs of mandates and regulations Sanders wants to impose on businesses, such as a $15 minimum wage, plus mandatory paid medical leave, vacations and sick days.

He’d also make it far easier for unions to organize.

Keep in mind that when Obama became president, the national debt was about $8 trillion. Now it’s $18.5 trillion, thanks to the Democrats. And if Bernie Sanders is elected, it will go to over $36.5 trillion. This is what Bernie Sanders expects to solve by “taxing the rich”. And Hillary Clinton expects to get the money for her spending from “taxing the wealthy”, as she said in the CNN debate. Do the rich have enough money lying around for the Democrats to confiscate?

Can we pay for it by “taxing the rich”?

A while back, the libertarian Cato Institute had an article talking about who would pay for Obama’s $1 trillion health care plan. They asked whether Obama could pay for it by “taxing the rich”.

The answer is no:

Funding the new health-care plan on the backs of households making $200,000 or more per year would require permanently increasing their annual total tax payments by about 50 percent. So, for example, a household that currently pays $50,000 in federal income taxes would need to pay another $25,000. Remember, however, that Social Security and Medicare already face enormous shortfalls. Shoring up these programs — another Obama campaign promise — would require collecting 328 percent more tax revenue from the rich. No, we didn’t forget a decimal point: That is three hundred and twenty-eight percent.

And what follows from taxing the rich?

[…]A major tax increase causes the tax capacity of the rich to shrink gradually as two factors kick in. First, many of the households falling into Obama’s “rich” definition are married couples in which both partners are working professionals. When tax rates rise, the lower-earning spouses in these couples tend to work less. Often, they quit work entirely. Second, many of the “rich” are budding entrepreneurs and small-business owners. They finance their operations using their own after-tax income, or with after-tax resources from family and friends. Small-business innovation is the fuel for long-term economic growth. In fact, many of the largest companies in the United States today were either small or nonexistent just 25 years ago. Killing small business kills the American economy.

The rich in France abandoned France in droves when the socialist Francois Hollande passed a 75% top income tax rate. Why do Democrat voters think that this would not happen here? We have to learn economics by watching what happens after the policies are enacted, in other times and places. Higher taxes on the rich cause them to produce less, lowering tax revenues.

I myself have been planning to stop working within the next 5 years, exactly because I can see that the Democrat voters are taking us in the direction of massive taxes on employment. I don’t intend to be working when that happens. If enough people respond to higher tax rates like me, the Democrats are going to have an even bigger problem paying for their spending promises.

Do tax hikes, welfare spending and minimum wage hikes lower income inequality?

Here’s Heritage Foundation economist Stephen Moore to explain.

He writes:

Massachusetts Sen. Elizabeth Warren recently appeared on one of the late night talk shows, beating the class warfare drum and arguing for billions of dollars in new social programs paid for with higher taxes on millionaires and billionaires. In recent years, though, blue states such as California, Illinois, Delaware, Connecticut, Hawaii, Maryland and Minnesota adopted this very strategy, and they raised taxes on their wealthy residents. How did it work out? Almost all of these states lag behind the national average in growth of jobs and incomes.

So, if income redistribution policies are the solution to shrinking the gap between rich and poor, why do they fail so miserably in the states?

The blue states that try to lift up the poor with high taxes, high welfare benefits, high minimum wages and other Robin Hood policies tend to be the places where the rich end up the richest and the poor the poorest.

California is the prototypical example. It has the highest tax rates of any state. It has very generous welfare benefits. Many of its cities have a high minimum wage. But day after day, the middle class keeps leaving. The wealthy areas such as San Francisco and the Silicon Valley boom. Yet the state has nearly the highest poverty rate in the nation. The Golden State, alas, has become the inequality state.

In a new report called “Rich States, Poor States” that I write each year for the American Legislative Exchange Council with Arthur Laffer and Jonathan Williams, we find that five of the highest-tax blue states in the nation—California, New York, New Jersey, Connecticut and Illinois—lost some 4 million more U.S. residents than entered these states over the last decade. Meanwhile, the big low-tax red states—Texas, Florida, North Carolina, Arizona and Georgia—gained about this many new residents.

What’s wrong? Isn’t raising taxes, growing government and spending more on welfare supposed to make reduce income inequality? Well, the trouble is that you need to think about things from the point of view of the people who create the jobs. People who want to start a business prefer to move to states where they can keep more of the money they earned. So, that’s why there is a mass exodus from states that don’t allow job creators to keep the money they earn. And naturally, they hire workers in their new state once they get there. Eventually people in the high-tax states move to where the jobs are, too.

Stephen Moore has actually measured it:

The least “regressive” tax states [high tax states] had average population growth from 2003 to 2013 that lagged below the national trend. The 10 most highly “regressive” tax states [low tax states], including nine with no state income tax, had population growth on average 4 percent above the U.S. average. Why was that? Because states without income taxes have twice the job growth of states with high tax rates. 

[…]Ohio University economist Richard Vedder and I compared the income gap in states with higher tax rates, higher minimum wages and more welfare benefits with states on the other side of the policy spectrum. There was no evidence that states with these liberal policies had helped the poor much and, in many cases, these states recorded more income inequality than other states as measured by the left’s favorite statistic called the Gini Coefficient.

[…]The 19 states with minimum wages above the $7.25 per hour federal minimum do not have lower income inequality. States with a super minimum wage—such as Connecticut ($9.15), California ($9.00), New York ($8.75), and Vermont ($9.15)—have significantly wider gaps between rich and poor than states without a super minimum wage.

No, I am not an economist, but I think that this is because the real minimum wage is ZERO, and that’s what more people in high minimum wage states make compared to people in low minimum wage states. If Seattle raises the minimum wage to $15 and the workers end up making the real minimum wage (ZERO) because job creators can’t pay them, then naturally the gap between rich and poor increases.

I think it’s always a good idea for people to think about things from the point of view of the small business job creator, and it all makes sense. If you want to get trained in how to do this, I recommend picking up introductory books by economists like Thomas Sowell, Milton Friedman or even F.A. Hayek. The goal here is to achieve good results, not to have good intentions.

A primer on the fiscal cliff facing us in January 2013: tax hikes and Obamacare

This is a medium-length article from the Tax Foundation. I found it fascinating to read, because I am busy making plans myself to deal with the next four years under Barack Obama.


On December 31, 2012, a large swath of the federal income tax code is scheduled to expire, an event which has come to be known as the “fiscal cliff.” Among the expiring provisions are the 2001 and 2003 tax cuts enacted under President Bush, a compromise on the estate tax, a “patch” in the Alternative Minimum Tax (AMT) reducing its impact, the temporary 2 percent payroll tax holiday, increased business expensing, and the “extenders” package of miscellaneous tax deductions. On January 1, 2013, five taxes enacted as part of the Patient Protection and Affordable Care Act (PPACA)—popularly referred to as Obamacare—also take effect, along with sequester spending reductions of $109 billion due to the failure of the “Supercommittee” to reach consensus on budget reductions.

In late February, the U.S. government will hit the debt ceiling, exhausting its ability to borrow to finance ongoing spending without an increase by Congress. Finally, the federal government’s continuing resolution appropriating spending expires on March 27, 2013.

Here are some of the things to look out for, which are all described in detail in the article:

  • 2001 and 2003 Tax Cuts Expiration
  • Estate Tax Increase
  • Alternative Minimum Tax
  • Payroll Tax Increase
  • Business Depreciation Expense
  • Taxes in PPACA (Obamacare)
  • Debt Ceiling
  • Sequestration

I am most concerned about income tax increase, the capital gains tax increase, the dividend tax increase and the payroll tax increase. These are all going to clobber me. I will have less money for charity and savings, and will have to retire later – and have less time for my Christian activities as a result of having to work longer. The voters in the last election have decided that I must sacrifice more of my earnings so that Obama can hand it all out to his constituents in exchange for their votes.

It helps to know exactly what will be changing in the future, because I have to know how to respond to this. Some adjustments that I might make cannot be done at the drop of a hat. Some take months to plan and execute. It’s best to think about things in advance. We have two deadlines: December 31st and March 27th. It will be interesting to see  what Washington decides to do.

UPDATE: James Pethokoukis of AEI explains the significance of the tax increases for capital gains and dividends. Other countries have lower rates on these taxes, so expect the capital that funds businesses and creates jobs to leave the country. Obama likes to rail against outsourcing, but he actually causes it – because of his ignorance.

75% of the costs of Obamacare will be paid by those making $120,000 or less

The video shows the chief economist of the Wall Street Journal, Stephen Moore, making the claim that nearly 75% of Obamacare costs will fall on the backs of those Americans making less than $120,000 a year. (H/T Gateway Pundit)

The Heritage Foundation explains more, using the official numbers from the Congressional Budget Office. (H/T Bad Blue)


President Obama repeatedly promised not to raise taxes on middle-class families. Yesterday, the Supreme Court ruled that he already has.

Chief Justice John Roberts upheld the President’s health care law on the grounds that the “individual mandate” is a constitutionally permissible tax increase. This violates Obama’s pledge. Middle-class families will pay the vast majority of these new taxes.

Obamacare imposes a penalty—or tax increase—on Americans who do not purchase health insurance. The Congressional Budget Office estimates that most of those paying these taxes are middle-class individuals and families making less than 500 percent of the federal poverty level: $59,000 for an individual and $120,000 for a family of four. Three million lower-income and middle-class Americans will pay an estimated $2 billion in these “mandate taxes.”

The Supreme Court’s interpretation puts the President in a peculiar situation. In 2008, he promised not to raise taxes on the middle class and accused Republican nominee John McCain of wanting to tax health benefits: “And I can make a firm pledge: under my plan, no family making less than $250,000 will see their taxes increase…not any of your taxes. My opponent can’t make that pledge.… [H]e wants to tax your health benefits.” Who could have predicted that Obama would raise taxes on millions of Americans who do not have health insurance?

Obama grossly mischaracterized his health care plan, and now American citizens will pay the price. He has both attacked individual freedom and burdened millions in the middle class.

I thought that Obama said that he would raise taxes on the middle class? For a full list of the taxes in Obamacare, click here.

In 2013, taxpayers will be paying more of their incomes to government

From CNS News.


The tax increases scheduled to take effect in January 2013 – dubbed Taxmageddon – could have the American people spending more days than ever working to pay for federal and state government, areport from the Tax Foundation shows.

A host of tax rates are scheduled to rise in January 2013 – when George W. Bush-era tax rates and the annual patch for the Alternative Minimum Tax expire – leading to a tax increase of approximately $500 billion in 2013, according to the conservative Heritage Foundation.

The Congressional Budget Office reported in January that taxes would increase by $4.6 trillion over ten years, if Congress allows the rates to rise as scheduled at the end of this year.

Tax Foundation economist William McBride estimated that this historic tax increase would push Tax Freedom Day to its latest point ever.

Tax Freedom Day is the day when – theoretically – Americans begin working for themselves and can stop paying for government. It assumes that 100 percent of a person’s wages go to paying for federal and state tax burdens. The day when government operations are fully paid for is Tax Freedom Day.

In 2012, Tax Freedom Day was April 17. However, Taxmageddon may push it until the end of April or beyond, McBride reported in a blog post on the foundation’s website. At the federal level, the 2012 tax increases would add 11 days to the Tax Freedom Day calculation, pushing it to April 28.

Adding in rising state and local tax revenues could push Tax Freedom Day beyond its May 1 record.

The Taxmageddon provisions adding to the cost of government – measured in the days that Americans will spend paying for it – are as follows:

  • Bush tax rates – 2.6 days
  • Alternative Minimum Tax – 2.2 days
  • Small business tax cuts – 0.4 days
  • Corporate income tax – 3.4 days
  • Payroll tax cut – 2.5 days
  • Estate tax – 0.2 days

One of the problems with all of this voting for bigger government is that there is less money for people to make their marriages and families work. The more we vote for bigger government, the less we haves as individuals for our own plans, including our marriage and family plans.