Bernie Sanders’ ambitious plans to raise revenues for new government programs would increase taxes by $13.6 trillion and cost the economy 6 million jobs by slowing growth, according to a new analysis released Thursday.
The Tax Foundation, a right-leaning nonprofit think tank in Washington, released a projection of the Vermont senator’s plan saying his proposed higher tax rates and broader tax base would crimp economic growth and lower incomes by more than 10 percent across the board.
The biggest losers in the Democratic candidate’s proposed tax system would be the top 1 percent, according to the Tax Foundation. Their after-tax income would fall by nearly a quarter, after taking slower economic growth into account.
But all groups would see their incomes fall, with the poorest 10 percent of earners losing nearly 15 percent on an after-tax basis.
The think tank assessed Sanders’ plans using a model close to one of the tax models employed by Congress’ own tax policy analysts, and using IRS data. The plan includes dramatically higher tax rates on income and on investment for high earners, but the Tax Foundation found that the biggest revenue-raisers would be new payroll and income taxes that affect all earners.
Specifically, Sanders has proposed a new 6.2 percent employer-side payroll tax and a 2.2 percent “premium” to pay for a single-payer healthcare program. Those two provisions would amount to a $6.6 trillion tax hike over 10 years.
Because Sanders’ healthcare plan would eliminate private-sector health insurance, employers would no longer offer workers health insurance coverage, which is excluded from taxable income under current law. That newly taxable income would translate to another $3.6 trillion in higher revenues, according to the Tax Foundation.
In contrast, the tax increases specifically targeted at higher-income households, including the higher top rates and lifting the cap on Social Security payroll taxes, would raise $2.9 trillion.
Those numbers all represent what Sanders’ proposals would raise on paper. But because they would raise the cost of capital for businesses and lower the incentives to work, in the Tax Foundation model, they would slow economic growth, cutting into tax revenues. Taking the hit to growth into account, Sanders would raise revenues by under $10 trillion in total.
The Tax Foundation’s report highlights the differences between Sanders and his rival for the Democratic nomination, Hillary Clinton. On Monday, the organization estimated that Clinton’s tax plan would raise revenues by $500 billion on paper. In other words, Sanders’ tax hikes are 28 times the size of Clinton’s.
Sanders’ plans would also significantly raise taxes on middle class households, even setting aside the effects on economic growth. That prospect creates a political liability for the populist candidate, who has argued that families would save more under his plan because they wouldn’t have to pay for private insurance.
The Tax Foundation has also scored the Republican candidates’ tax reform plans, which all feature lower tax rates and simplified systems. All of the top GOP candidates’ proposals would lose revenues for the Treasury and represent huge tax cuts for the 1 percent, while leading to faster economic growth and more jobs.
