Mike Bloomberg's $5 Trillion Tax Plan

Mike Bloomberg's $5 Trillion Tax Plan

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Plus - The American Dream alive and well in ... Finland?
Monday, February 3, 2020

Bloomberg Proposes $5 Trillion in Taxes on the Rich and Corporations

Michael Bloomberg released a tax plan Saturday that aims to raise $5 trillion from high-income households and corporations over 10 years to pay for new spending on education, infrastructure and climate change.

Some details:

  • The top income tax rate for individuals would return to 39.6%, up from the 37% imposed by the 2017 Republican tax cuts.
  • Incomes over $5 million would face a 5% surtax, raising the top rate to 44.6%. The Bloomberg campaign says this would affect less than 0.1% of taxpayers.
  • High-income earners would pay capital gains taxes at the higher rates imposed on ordinary income.
  • The stepped-up basis for inheritances would be eliminated, with capital gains taxed at death.
  • The 20% pass-through deduction would be eliminated, as would the carried-interest loophole.
  • The corporate tax rate would increase to 28%, up from the 21% imposed in 2017.
  • The IRS would receive increased funding to focus on unpaid taxes.

As The New York Times’ Jim Tankersley and Alexander Burns note, Bloomberg’s plan “would almost certainly raise his personal tax bill.” In a statement, Bloomberg addressed that point, saying, “I will also pay more in taxes to make sure all Americans have the same opportunities I did. That’s only right.”

At the same time, the proposal avoids the wealth taxes that have been proposed by some Democratic candidates. Bloomberg, worth an estimated $60 billion, reportedly believes that a wealth tax would be unconstitutional.

Bloomberg’s campaign said that while he sees the current $1 trillion annual deficit as a problem, he doesn’t think it’s urgent and wants to use the proposed tax revenues to pay for new programs. “Those investments require new revenue - and a fairer, more progressive tax system that asks wealthy Americans like me to pay more,” Bloomberg said.

The bottom line: The tax proposal shows how far the tax debate has moved in the Democratic party. “Bloomberg’s proposals are the latest sign that progressives are winning the debate over taxes, inequality and the economy,” former Beto O’Rourke adviser Brendan Duke told The Wall Street Journal.

Where the Dem Candidates Stand on Health Care

As Iowa Democrats prepare to pick their party’s first winner in the presidential primary, the candidates’ approach to health care remains one of the most substantial and potentially divisive issues voters will have to face. Here’s a brief review of where the candidates stand on Medicare for All, the proposed sweeping overhaul of the U.S. health-care system that has served as a point of contention during the campaign:

Bernie Sanders: The Vermont senator is the most vocal supporter of Medicare for All, which he says would end up saving money for the country overall, despite its enormous price tag. Sanders wants to ban private insurance and eliminate out-of-pocket spending for patients, while covering a wider array of services than the current Medicare system. “The ambitious proposal would cost more than $30 trillion over 10 years, according to independent analyses,” Reuters’ Joseph Ax writes.

Elizabeth Warren: The Massachusetts senator also supports Medicare for All and has released a detailed plan for financing it. Facing pushback on her proposal, Warren released a transition plan for moving to a single-payer system more gradually over several years. “That proposal drew some criticism from the left, with Sanders supporters claiming she had backed down from her Medicare for All stance,” Ax says. “Warren has said she remains committed to Medicare for All and that her plan would provide more coverage to more Americans in a shorter time frame.”

Joe Biden: The former vice president says he wants to expand the Affordable Care Act by offering a public option for insurance. “His healthcare plan, estimated to cost $750 billion over 10 years and paid for partly by higher taxes on the wealthy, would let people enroll in a paid government healthcare plan as an alternative to private insurance,” Ax writes.

Michael Bloomberg: The former mayor of New York City says Medicare for All is unaffordable and proposes to offer a public option for insurance that exists alongside the current employment-based system. His plan would cost $1 trillion over 10 years.

Pete Buttigieg: The former mayor of South Bend, Indiana, has proposed a public option he describes as “Medicare for all who want it.” Buttigieg says that over time, that option would result in a single-payer system as more Americans sign up for cheaper and more efficient Medicare. His plan would cost $1.5 trillion over 10 years.

Amy Klobuchar: The centrist Minnesota senator says that Medicare for All is a “pipe dream,” and would instead offer a public option through either Medicare or Medicaid, paid for in part by raising taxes on the wealthy.

Andrew Yang: The tech entrepreneur says he supports the “spirit” of Medicare for All and wants to provide a public option to give people the freedom to leave their jobs. However, he does not want to ban private insurers.

Tom Steyer: The finance billionaire has proposed a public option that would cost $1.5 trillion over 10 years.

Number of the Day: $136 Million

The U.S. Department of Health and Human Services said Sunday that it may need to transfer $136 million to fund its efforts to combat the coronavirus, as the Centers for Disease Control and Prevention rapidly depletes its $105 million fund dedicated to emergency public-health responses. “The additional money would address growing demands on CDC, HHS’s Office of the Assistant Secretary for Preparedness and Response and HHS’s Office of Global Affairs,” The Washington Post said Monday. “About $75 million would be available for CDC, $52 million for ASPR and $8 million for the Office of Global Affairs.”

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The American Dream Alive and Well in ... Finland?

Bernie Sanders’s critics routinely accuse him of being a “socialist” bent on importing nefarious foreign values to the U.S., and President Trump took that approach one step further this past weekend, telling Fox News host Sean Hannity, "I think he’s a communist. I mean, you know, look, I think of communism when I think of Bernie.”

For his part, Sanders says he is a “democratic socialist” who looks less to Cuba for inspiration than to the Nordic nations such as Denmark, Sweden and Finland – countries that use high taxes to fund generous social programs including universal health care and free public education.

Speaking at Davos last month, the new Finnish Prime Minister Sanna Marin put an interesting twist on that economic model, tying it not just to a robust social safety net in the European tradition but also to something near and dear to most Americans:

“I feel that the American Dream can be achieved best in the Nordic countries, where every child no matter their background or the background of their families can become anything, because we have a very good education system. We have a good health-care and social welfare system that allows anybody to become anything. This is probably one of the reasons why Finland gets ranked the happiest country in the world.”

Tax Intrigue of the Day

Was Amazon’s Jeff Bezos driven by jealousy of Elon Musk in his pursuit of huge tax breaks for his new headquarters? Bloomberg’s Spencer Soper, Matt Day and Henry Goldman made a deep dive into Amazon’s effort to build a major facility in New York City – an effort that fell apart after protests over the tax breaks the tech giant won from local officials.

Here’s how they frame it:

“When Elon Musk secured $1.3 billion from Nevada in 2014 to open a gigantic battery plant, Jeff Bezos noticed. In meetings, the Amazon.com Inc. chief expressed envy for how Musk had pitted five Western states against one another in a bidding war for thousands of manufacturing jobs; he wondered why Amazon was okay with accepting comparatively trifling incentives. It was a theme Bezos returned to often, according to four people privy to his thinking. ...

And so, when Amazon launched a bakeoff for a second headquarters in September 2017, the company made plain that it was looking for government handouts in exchange for a pledge to invest $5 billion and hire 50,000 people. The splashy reality-television-style contest generated breathless media coverage, attracted fawning bids from 238 cities across North America and ended with Amazon deciding to split the so-called HQ2 between New York and Virginia. Then progressive politicians attacked the $3 billion in incentives offered by New York, and Bezos pulled out.”

For the full story, see the Bloomberg piece here.


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