When Rep. Alexandria Ocasio Cortez floated her idea (quasi-embraced by Sen. Kamala Harris) to raise the top marginal income tax rate to 70 percent on the richest Americans in order to pay for her "Green New Deal," I wrote that governmental confiscation of 70 cents on any dollar earned in a free society is unfair and immoral. But would such a scheme at least make significant headway toward boosting federal revenues, commensurate with the orgy of new spending the Democratic Left is advocating? Budget analyst Brian Riedl crunches the numbers for the Daily Beast and details the predictable answer to that question:
When confronted with how to pay for their extraordinarily expensive policy agenda, the answer of liberal lawmakers, analysts, and advocates is nearly always the same: tax the rich. How to close the $12 trillion baseline budget deficit over the next decade (a figure that already assumes the 2017 tax cuts expire)? Tax the rich. How to pay for the $42 trillion Democratic socialist agenda that includes single-payer health care ($32 trillion), a federal jobs guarantee ($6.8 trillion), student loan forgiveness ($1.4 trillion), free public college ($800 billion), and infrastructure ($1 trillion)? Easy. Tax the rich. How to offset Sen. Kamala Harris’ proposed $3 trillion tax cut for middle- and lower-income families? Tax the rich. For those keeping score, that is $57 trillion to be financed mainly through tax hikes on the rich, even after ending the 2017 tax cuts...The “just tax the rich” rhetoric remains empty because the numbers simply do not add up. Wealthy families and corporations are not a bottomless ATM available to finance a socialist utopia.
He notes that the US already has one of the most progressive tax systems in the industrialized world, with wealthy Americans paying more than their "fair share," contra lefty conventional wisdom. He writes that even if Democrats managed to (a) claw back the GOP tax cuts of 2017, and (b) repeal the recent increase in defense spending, then (c) implement their wish list, Uncle Sam would end up spending well over $4 trillion on new programs every year, on top of what the federal government already spends. That would require more than doubling the existing annual budget. Now is as good a time as any to remind you that the US is already running large deficits, has racked up close to $22 trillion in national debt, and has made tens of trillions of dollars-worth of unpaid-for promises -- or "unfunded liabilities" -- with which politicians are failing to seriously reckon. The new tax-and-spend binge would be on top of all of that.
By Riedl's math, an AOC-style tax hike would raise $22 billion annually. The Washington Post, which also factored in higher investment taxes, pegged the number at more than $70 billion. Let's approximately split the difference, for the sake of argument, and say that the new rates could squeeze 50 billion more dollars out of the rich (setting aside the incentives and adjustments that would likely drive that figure lower). What sort of impact would that increased revenue make? "$50 billion a year would fund one percent of the Democratic Socialist agenda," Riedl told me on Benson & Harf last night. What would happen if AOC and her allies focused exclusively on single-payer healthcare? That massive and disruptive program would cost taxpayers at least $3.2 trillion, and almost certainly more, in new funding every single year. If they applied every cent of the $50 billion in (questionable) revenues from these hypothetical tax increases to the single-payer tab, it would cover less than two percent of the annual bill. This yet again underscores the undeniable mathematical reality:
Spending like Europe requires taxing like Europe. This means, in addition to federal and state income taxes, a value-added tax (VAT)—essentially a national sales tax—that affects all families. CBO data estimates that raising 15 percent of GDP would require imposing an 86 percent VAT rate, or hiking the payroll tax from 15.3 percent to 56.5 percent. No wonder many spenders prefer the “just tax the rich” fairy tale...It is an illusion that America can finance socialism—or even balance the budget—mainly on the backs of the rich. But don’t take my word for it. Just note the lack of specific, scored budget blueprints showing otherwise.
Skeptics can also read the admission of the DNC Chairman himself, who's conceded that "Medicare for All" (status quo Medicare is already going insolvent) would necessitate big tax hikes on everyone, a point that other liberals occasionally confirm in moments of candor. Are middle income and working class Americans prepared to pay much, much higher taxes? Are Democrats prepared to campaign on that agenda? In the meantime, rather than cooking up new strategies to take away other people's money to pay for her under-developed fantasies, perhaps AOC should focus on getting her own House of Fairness in order:
Waging a slogan-heavy war on math may be easier than actually governing and meeting current obligations.