Why I Support Bernie Sanders Tax Plan

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OK, perhaps not exactly, but the actual effects of his proposals that he’s been hiding are what I think we need. The Bookworm pulls apart his argument in detail. In fact, she has a site dedicated to countering the false promises that Bernie is feeding his supporters.

As to his tax plan:

To fund his proposed 18 trillion dollars in new spending, Bernie is going to tax everybody and tax them hard. This is not a Republican viewpoint. This comes from Vox, a internet media outlet known for its strong Progressive orientation.

Writing at Vox, Dylan Matthews took a look at the Tax Code if Bernie is allowed to go forward with his plans to socialize medicine; make college free for everyone, although he’s already conceded that college graduates aren’t getting jobs as matters stand now; revamp America’s infrastructure, something Obama promised but failed to do; have the government create jobs for young people, a ridiculous scheme that Milton Friedman destroys with a single question about spoons; expanding Social Security, a program that is already going broke and suck vast amounts of money out of the federal budget; and a whole bunch of other, smaller programs.

Matthews even provides a handy chart to show how everybody’s tax rate increases – you can see how you’d be affected here.

Faithful readers know that my economics lean toward the proven success of the Hayek-insppired school of thought, so why am I getting behind Bernie’s plan?

Ace provides a great follow-up to what Kevin D. Williamson wrote about Republicans’ unwillingness to have the tough talk that America needs to hear on federal spending. First, here is part of Williamson’s piece, which is worthy of a “Read the whole thing.”

Every Republican tax-reform plan should be rooted in this reality: If you are going to have federal spending that is 21 percent of GDP, then you can have a.) taxes that are 21 percent of GDP; b.) deficits. There is no c.

If, on the other hand, you have a credible program for reducing spending to 17 or 18 percent of GDP, which is where taxes have been coming in, please do share it.

The problem with the Growth Fairy model of balancing budgets is that while economic growth would certainly reduce federal spending as a share of GDP if spending were kept constant, there is zero evidence that the government of these United States has the will or the inclination to enact serious spending controls when times are good (Uncork the champagne!) or when times are bad (Wicked austerity! We must have stimulus!).

And Ace goes on to make the point:

The problem has grown so immense that we’ve decided to declare it officially a Non-Problem. (It will decide to re-assert itself as a Really Big Problem in a short period of time.)

So I no longer believe in the “starve the beast” theory, because the “starve the beast” theory relies upon Americans understanding the mid-to-longer term trajectory of their spending choices, which they plainly do not.

Since Americans are not capable of understanding the mid-to-longer term trajectory of their spending choices, it seems to me the only way to impose budget discipline and spending rollback is to offer Americans an immediate, as opposed to future, confrontation with reality: that is, if Americans wish to have so much government, they should be forced to pay for the level of government they are choosing, and not defer that payment (as they apparently will choose, every single time) into the future, to be imposed upon their children.

But, instead, they must be forced to reckon with the level of government they are choosing now by paying the full freight and cost of that government now.

That is to say: I believe that rolling back spending is only possible when Americans are made to feel the costs of the government they’re choosing, and that will only happen when they’re forced to actually pay for it.

If Americans want 21% of GDP to be wasted on government, then we should make them pay 21% of their GDP to pay for this clumsy, murderous Goliath.

And when they grow tired of paying 21% of GDP for this level of gold-plated, clay-footed government, perhaps they will see the sweet reason of reducing government expenditures down to, say, 19% of GDP, or, dare we dream, 18%.

I don’t see any other way, frankly. And removing ever-more people from the tax rolls altogether — making lower income people not even pay a small amount of tax — accelerates the growth of government, as we create a larger and larger class for whom Big Government has tangible inducements and no visible drawbacks.

One of my Lefty pals on Facebook likes to invoke the point that “Americans want American levels of taxes and European levels of government.” It’s one of the rare points where we’re in total agreement. I think that passing budget after budget where we essentially pass tax increases on future generations is cowardly or ignorant at best, and absolutely malevolent at worst. Last year Ben Carson brought up the concept of everybody having “skin in the game”, via PJ Media’s Roger Simon:

Ben Carson — the candidate from the most impoverished background of all (Rubio comes in second) — approaches it differently. Coming from his religious heritage, the doctor wants everyone, whatever their financial status, to pay something close to the tithe the church recommends (slightly more, actually). What this does is give every citizen, as the saying goes, “skin in the game.” No matter how poor you are, even if you are on other forms of assistance, you contribute something to the common good. The rich, even the ultra-rich, only pay that same percentage.

At first I was put off by this conception of Carson’s. I’m not a religious person and the use of the word tithe made me uncomfortable. But then I started to see what he was after. The people on the streets of Baltimore need to participate, not just receive handouts. Their self-respect demands this. We have all seen the results of forty years of top-down welfare-state economics on our minority communities, the so-called War on Poverty. Time to try something different. Time to treat them as equals, not as poor relations incapable of taking care of themselves. Equals pay too. Give them, as I said, skin in the game. We’re all in it together, after all. I guarantee you they will feel better about themselves too. And the results might surprise everyone.

If only some genius would provide a simple formula for showing what each American’s fair share would be to balance the budget. Wait a minute, somebody did! Four years ago I wrote up an exercise for balancing the budget. You can read the details here, but to quickly summarize the essence of it is that the tax rates are extremely progressive and everybody pays something. And since projected additional debt for 2016 is lower than what the White House forecasted in 2012, your bill is actually lower than what I had originally projected – WOHOO! Before you celebrate too much, here is your revised 2016 bill:

DeficitImage
Click image to enlarge

One quick look at this chart gives you an idea of how this additional tax bill would impact your household budget. And mind you, our federal debt doesn’t even address our state and local debt, not to mention unfunded liabilities. Personally, I’m a “rip the band aid off” kind of guy, and if I have to feel pain I’d rather feel it sooner than later. And back to my point at the top of this post, however disastrous for this country a Sanders presidency would be things won’t get better until they get worse first. And there is no better way to guarantee life in America getting worse than the words “President Sanders”!
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Cross posted from Brother Bob’s Blog

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Your tax bill image takes the viewer to snapfish. Got another way to show this item?

Sanders isn’t actually proposing $18 trillion in new spending. Most of that figure is actually a cummulative reallocation of money that’s already being spent.

I mean, really, $18 trillion in new spending? Think about this assertion for a moment. It’s ridiculous. How is that people don’t even bother to question such an over-the-top propaganda meme? Do people become confused when the numbers get into billions and trillions? A trillion is a thousand times as much.

Consider one of Sander’s most suspect intentions: Making all publicly funded colleges tuition free. How much are we actually talking about? Here’s Exactly How Much the Government Would Have to Spend to Make Public College Tuition-Free

The figure is surprising. It’s also not a matter of new spending. It’s largely a matter of reallocation of money that’s already being spent on education.

@Greg:

One has only to review the history of the pathetic, laughable underestimation of projected government expenditures for any government handout to understand that “free” government paid college tuition is yet another leftist con job that will result in astronomically greater cost than what the leftist propagandists claim.

There is no reality based program that involves adding layer upon layer of government, unionized, bureaucratic middlemen than can ever be more efficient or less costly than a non-government system.

And God help the nation should the government take over college tuition. Who determines the qualifications for eligibility to attend college at taxpayers expense? Are students to be required to repay taxpayer funds for failed classes?

It is absolute financial insanity for a nation that is already staring at $20 trillion in debt, with every year adding more debt for current government expenses, to add even more costly programs we cannot afford. Sanders plan is nothing but a deceptive, blatant attempt to buy votes of people who got their understanding of economics from sitcoms like “Friends”, where jobs are nothing but background do-nothing scenarios in between periods of sitting around coffee shops blathering about whatever personal life crisis of the moment has their short attention spans.

Maybe we could shave a bit off of the military industrial complex’s annual tax payer-funded feeding of $585 billion.

The problem is that everybody wants to cut the other guy’s program. Most likely it will eventually end as it usually does with fiat currency: runaway inflation. Debts will be honored in monopoly money.

@Greg: As usual, Greg attaches a link that is quite deceptive. He only addresses the amount of money currently spent by the government. He fails to address the loans and pay as you go student expenses. If college is free, would students take out education loans and save for college? would they work their way through college? Greg and his buddy Berni both belong in the psyco ward!

If the playing field were more level, there might be a lot less need for government programs that attempt to compensate for the consequences of the imbalance. It is an imbalance that has made a tiny segment of the population enormously wealthy. Someone profits when jobs are offshored, for example. Should American factory workers really be expected to compete with Chinese factory workers who are paid around $80 per week? Is it unreasonable of them to be angry when this has become a routine strategy for increasing corporate profits?

To add insult to injury, those who profit from the dysfunction the most often complain the loudest about the taxes they pay. They sometimes suggest any complaints about the rigged system or their preferential treatment is indicative of envy on the part of a pack of lazy freeloaders. Hearing the most privileged complain can sometime become a bit irksome. We once had a revolution to get away from such people.

The reason Bernie Sanders is getting traction is because no one is addressing this reality. Republicans have not only ignored it. They’ve also vigorously opposed any social programs that attempt to address the consequences. They blame the problem on such programs.