Bernie Sanders’ tax-and-spend plans for the federal government would benefit most middle-class families while soaking the rich, according to a comprehensive new analysis published Monday, as the populist Vermonter has said throughout his campaign.
However, even with historic tax increases and assuming that all goes to plan, Sanders’ proposed new government programs would push the federal debt into uncharted territory, nearly doubling the amount that would be owed by the government.
The Tax Policy Center, a nonprofit organization in Washington, modeled Sanders’ ambitious campaign proposals for new government programs, including universal healthcare, paid family leave, tuition-free public college and Social Security expansion.
The average household in the top 5 percent of incomes would be hit with $130,000 in new taxes next year and get back only a small fraction of that in benefits. Meanwhile, the average taxpayer would get $4,282 worth of net benefits out of Sanders’ plan, according to the analysis, even though all households would be paying more in taxes.
Throughout his campaign for the Democratic Party’s presidential nomination, Sanders has sought to convince middle-class voters that they would be better off under his vision of government, even if they paid more taxes. Democrats such as President Obama and Hillary Clinton have avoided spelling out middle-class tax increases as political poison.
Sanders’ campaign even complained specifically about an early study from the Tax Policy Center focusing just on his tax plans, which detailed the tax hikes middle-class families would face to finance his agenda.
Monday’s analysis of Sanders’ combined fiscal plans shows that he was right to be concerned. It also highlights, however, the inherent difficulties in marketing such sweeping new tax-and-spend plans and in formulating such plans without massive new debt.
It is “safe to see we have never seen a proposal as progressive” as Sanders’, said Len Burman, director of the Tax Policy Center.
But “without additional sources of revenues or spending cuts, the plan would add $21 trillion to the debt” in 10 years, Burman warned.
In comparison, the total federal debt is projected by the Congressional Budget Office to be $23.7 billion in 2026.
That level of debt, approaching twice the size of U.S. economic output, likely would slow growth by pushing up interest costs for the government and businesses.
And it would be difficult for Sanders to avoid accumulating huge amounts of debt without middle-class taxes that would undercut the benefits of his plan to average families.
“You could not rely on additional taxes from high-income people,” Burman said.
Broad-based taxes, such as the value-added taxes common in many European countries, probably would be necessary, Burman added. VATs are taxes on consumption of goods and services, paid ultimately by anyone who uses them.
The Tax Policy Center analysis does not take into account the hit to growth that could accompany the run-up in debt envisioned in Sanders’ plan.
It also assumes that the new programs would work without seriously affecting people’s behavior. For instance, the model does not anticipate that more people would attend college if public schools eliminated tuition or that students would choose free public schools over private schools.
