Democrats Roll Out New Tax on Millionaires

Democrats Roll Out New Tax on Millionaires

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Plus, Hillary Clinton knocks two of Elizabeth Warren's big ideas
Thursday, November 7, 2019

Democrats Propose New Tax on Millionaires

Two Democratic lawmakers unveiled a plan Thursday that would raise taxes on high-income households.

Sen. Chris Van Hollen of Maryland and Rep. Don Beyer of Virginia are proposing a 10-percentage point surtax that would apply to wages and capital gains over $2 million for married couples and $1 million for individuals. That would increase the top income tax rate for those households from 37% to 47% and lift the capital gains rate from 20% to 30%.

Targeting two related problems: “This is a bill designed to address two major problems of public policy: the lack of revenue, and inequality,” Beyer said on a call with reporters. “It’s a laser-focused solution that requires those who benefited the most from the economy to contribute in a way they simply haven’t been asked to before.” Both problems were exacerbated by the GOP’s tax cuts in 2017, the lawmakers said, and the new tax is intended to reverse some of those effects.

Maximizing revenues: The surtax would raise about $635 billion over 10 years while affecting 0.2% of taxpayers (about 329,000 tax paying units in 2020), according to an analysis by the Tax Policy Center. Van Hollen told reporters that the revenue-maximizing tax rate on capital gains tops out somewhere around 33%, according to the Joint Committee on Taxation, and the proposal is designed to hit that money-raising “sweet spot.”

Keeping it simple: Unlike the wealth taxes proposed by Elizabeth Warren and Bernie Sanders, the proposed surtax would be easy to implement, and there are no questions about its legality. (Surtaxes have been used before, including the 3.8% surtax on net investment income that is currently in effect to help cover the cost of Obamacare.) It may also be easier to convince wealthy critics of the Warren and Sanders proposals — some of whom have said publicly that they agree they should be paying more in taxes, even though they oppose the idea of a wealth tax — to adopt it. And it may appeal to moderates, as well.

A broad effort: The legislative proposal is backed by a “millionaires’ surtax” campaign run by several progressive groups, including Americans for Tax Fairness, the Institute for Policy Studies and Patriotic Millionaires. The announcement of the new tax plan was accompanied by a graphics-heavy website and a video that explains the proposal in simple terms.

Polling shows support: A Hart Research poll of 1,001 likely voters commissioned by the surtax group suggests that Americans generally favor raising taxes on the rich, with 65% saying they support higher taxes on the wealthy and on corporations. Democrats overwhelmingly (73%) support the surtax proposal — and a majority of Trump voters (57%) and Republicans (53%) do, too.

The Millionaire’s Surtax group said the poll points to a winning message on the issue: “it raises more than $600 billion in revenue; it’s paid only by a small fraction of the richest 1%; and it will fund investments that benefit everyday Americans, like education, infrastructure, and healthcare.”

Number of the Day: $13 Billion

That’s how much Microsoft founder Bill Gates would pay in federal taxes this year under Elizabeth Warren’s proposed wealth taxes, according to back-of-envelope calculations by CNBC’s Robert Frank (video here). The figure includes a 6% tax on wealth over $1 billion — Gates is currently worth about $109 billion — and an additional tax on unrealized gains in Microsoft stock.

Gates questioned the Warren tax plan in widely shared remarks Wednesday, saying, “I’ve paid over $10 billion in taxes. … I’ve paid more than anyone in taxes, but I’m glad to — if I’d had to pay $20 billion, it’s fine. But when you say I should pay $100 billion, then I’m starting to do a little math about what I have left over.” Gates quickly added: “Sorry, I’m just kidding. So you really want the incentive system to be there and you can go a long ways without threatening that.” His comments seem to reflect a widespread resistance to the idea of a wealth tax among many of the country’s richest citizens.

Hillary Clinton: Warren’s Medicare-for-All Plan Won’t Ever Get Enacted

Hillary Clinton said Wednesday that she doesn’t believe Elizabeth Warren’s Medicare-for-All plan would ever become law and that there are better ways to raise revenues than Warren’s proposed wealth tax.

Asked at a New York Times conference whether she thinks the health-care plan released by Warren would ever get enacted, the 2016 Democratic presidential nominee said: “No, I don’t. I don’t but the goal is the right goal.”

In her 2016 campaign, Clinton supported a public health insurance option and rejected calls from Bernie Sanders, her rival for the Democratic nomination, for a single-payer system. On Wednesday, Clinton said she still favors a public option to build on the Affordable Care Act, which lifted insurance coverage rates to 90%.

“I believe the smarter approach is to build on what we have. A public option is something I've been in favor of for a very long time,” she said. “I don't believe we should be in the midst of a big disruption while we are trying to get to 100 percent coverage and deal with costs and face some tough issues about competitiveness and other kinds of innovation in health care.”

Clinton also said she supports the health care debate Democrats are having and tried to contrast that with the Republican efforts to repeal the Affordable Care Act. “Yeah, we're having a debate on our side of the political ledger, but it's a debate about the right issue, how do we get to health care coverage for everybody that we can afford?” Clinton said.

Warren responded on Thursday. “I’m saying, you don’t get what you don’t fight for,” she said, according to The Times. “You know, you’ve got to be willing to get out there and fight.”

On the issue of a wealth tax, another central element of Warren’s campaign, Clinton said she doesn’t understand how the proposal could work, suggesting it would be too disruptive. Clinton added that there are better ways to raise revenues, get the rich to pay more and combat inequality. “I just think there are better ways of doing it,” she said, adding that she would be in favor of raising the estate tax.

Watch Clinton’s full interview.

Medicaid Expansion Has Saved Thousands of Lives: Report

The expansion of state-level Medicaid programs as allowed by the Affordable Care Act is literally a matter of life and death, according to a new study highlighted by the Center on Budget and Policy Priorities Wednesday.

The study, published by the National Bureau of Economic Research, found that between 2014 and 2017, Medicaid expansion saved the lives of more than 19,000 people between the ages of 55 and 64 in those states that opted to expand their programs. By contrast, states that did not expand Medicaid saw more than 15,000 additional premature deaths in the same age group.

Matt Broaddus and Aviva Aron-Dine of CBPP say the report underscores the importance of expanding Medicaid in the states that have thus far avoided doing so. “The lifesaving impacts of Medicaid expansion are large: an estimated 39 to 64 percent reduction in annual mortality rates for older adults gaining coverage,” they said.

Map of the Day

More than 91% of people in the United States had health insurance in 2018, but coverage rates varied widely by state, ranging from 82.3% in Texas to 97.2% in Massachusetts. The Census Bureau map below shows states with the highest uninsured rates in green. Click through to see an interactive version with more state-by-state data, including details on private versus public coverage.

Twitter Thread of the Day: Do Deficits Matters?

Economist Jared Bernstein, a former adviser to Vice President Joe Biden, posed a question to a group of primarily left-leaning economists and economics reporters on Twitter: “A policy maker asks you: Do deficits matter? She has a 280 character attention span (ie, she's above avg). What do you tell her?”

Some of the responses:

Ernie Tedeschi, former Treasury economist now with Evercore ISI: “Yes, they matter. When the next recession hits, monetary policy may be constrained, so deficits may be the biggest deciding factor between downturn and depression. Deficits may have longer-run effects on interest rates, but there may be other, bigger factors going the other way.”

JW Mason, assistant professor of economics at John Jay College: “Large deficits may be a problem at some times and places, but there's no reason to think they are a problem for the 21st century United States. It's much more likely that our current deficits today is too small than too big.”

Dean Baker, senior economist at the Center for Economic Policy Research: “Not really.”

Bobby Kogan, chief mathematician for the Senate Budget Committee: “Depends, but not in the way folks talk about them. Deficits are useful tools, but goal of society is maximal good, so I want deficits to be maximally useful. Increasing inequality w/ them is bad way of generating inflation. Fighting poverty w/ them’s good.”

See the full thread here.


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