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Pick Your Poison Vol. 4: Will House Democrats choose Clinton or Sanders on Taxes?

May 10, 2016

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Hillary Clinton has failed in her quest to unify Democrats behind her, and now faces the prospect of a contested convention that will be decided by party insiders rather than voters. House Democrats now have a choice to make: Will they risk the ire of the liberal base and stand by unpopular FBI target Clinton? Or will they turn to socialist Senator Bernie Sanders and his extreme policies?

In this fourth of a series of pieces highlighting the pair of undesirable choices placed before Democrats, we will examine the Clinton and Sanders positions on taxes

  • Hillary Clinton and Bernie Sanders have both proposed to go further than President Obama in raising taxes on Americans.
  • Hillary Clinton’s tax plan would raise taxes by an estimated $498 million over the next decade.
    • Though not as damaging as her socialist rival’s plan, the non-partisan Tax Foundation estimates that Clinton’s plan would reduce the GDP by 1% over the long term, lowering wages by .8% and costing 311,000 jobs.
  • Bernie Sanders’ tax plan would raise taxes by an estimated $13.6 trillion over the next decade.
    • Though Sanders talks primarily about raising taxes on the wealthy, his plan actually includes a new 2.2% broad-based tax income tax, and would raise taxes on middle income households by an estimated $4,700 per year.
    • The non-partisan Tax Foundation estimates that Sanders’ plan would lead to a 9.5% lower GDP over the long term, due to significant increases in marginal tax rates and cost of capital, and a loss of 5.973 million jobs.
    • The Tax Foundation also estimates that after-tax incomes for all taxpayers would drop by 12.84% in the long-term due to Sanders’ Plan.
  • House Democrats will have to choose which path they prefer on taxes: Hillary Clinton’s plan to raise taxes by nearly $500 million that would slow growth and cost hundreds of thousands of jobs, or Bernie Sanders’ plan to raise taxes by $13.6 trillion that would slow growth even more and cost millions of jobs.

NRCC COMMENT: “Whether House Democrats stand with unpopular FBI target Hillary Clinton or socialist Senator Bernie Sanders on taxes, they will have to explain to their constituents why they are in favor of a radical plan that would significantly raise taxes on Americans. Both the Clinton plan and Sanders plan would take money out of voters’ pockets, harm the economy, and destroy jobs.” – Bob Salera, NRCC Spokesman

Background:

Sanders: ‘It will be a contested convention.’ “Bernie Sanders predicted Sunday that Hillary Clinton would not win enough pledged delegates to claim the nomination ahead of the Democratic convention in Philadelphia, and he delivered his most forceful call yet for superdelegates in states he’s won to consider throwing their support to him. Speaking at the National Press Club in Washington, D.C., the Vermont senator argued that Clinton ‘will need superdelegates to take her over the top at the convention in Philadelphia. In other words, it will be a contested convention.’” (Daniel Strauss, Politico, 5/1/16)

Details and Analysis of Senator Bernie Sanders’s Tax Plan. “Our analysis finds that the plan would increase federal revenues by $13.6 trillion over the next decade. The plan would also increase marginal tax rates on both labor and capital. As a result, the plan would reduce the size of gross domestic product (GDP) by 9.5 percent over the long term. This decrease in GDP would translate into an 18.6 percent smaller capital stock and 6.0 million fewer full-time equivalent jobs.” (Alan Cole and Scott Greenberg, Tax Foundation, 1/28/16)

Details and Analysis of Hillary Clinton’s Tax Proposals. “Over the past few months, former Secretary of State and Senator Hillary Clinton has proposed a number of new and expanded government programs. In order to pay for these new or expanded services, she has proposed raising and enacting a number of new taxes. Her plan would increase marginal tax rates for taxpayers with incomes over $5 million, enact a 30 percent minimum tax (the Buffett Rule), alter the long-term capital gains tax rate schedule, and limit itemized deductions to a tax value of 28 percent. Her plan would also restore the estate tax to its 2009 parameters and would limit or eliminate other deductions for individuals and corporations. Our analysis finds that the plan would increase revenue by $498 billion over the next decade. The plan would also increase marginal tax rates on both labor and capital. As a result, the plan would reduce the size of gross domestic product (GDP) by 1 percent over the long term. This reduction in GDP would translate into 0.8 percent lower wages and 311,000 fewer full-time equivalent jobs. (Kyle Pomerleau and Michael Schuyler, Tax Foundation, 1/26/16)

Politifact’s guide to the 2016 presidential candidate tax plans. “Under Sanders’ plan, the top 1 percent of taxpayers would pay $525,000 more on average or about 34 percent in after-tax income, while the top 0.1 percent would dole out $3.1 million or 45 percent more in 2017, according to the Tax Policy Center.Middle-income households would see their taxes rise by about $4,700, equal to about 10 percent of after-tax income. Those in the lowest-income bracket would pay an additional $165, or 1.3 percent… Analysts say Clinton’s proposals would increase federal revenues by $500 billion to $1.1 trillion in the first decade.” (Linda Qiu, Politifact, 4/7/16)