Senator Bernie Sanders Wants Big Bucks From Big Wallets

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Senator Bernie Sanders is a triple threat in U.S. political life. Like a baseball player who can hit, field, and throw, he represents Vermont in the Senate as an independent, is running for the presidency as a Democrat, and calls himself a full-fledged socialist. His economic views stand in sharp contrast to nearly every other candidate in the race, including Democratic front-runner Hillary Clinton.

While Sanders isn’t likely to trouble Clinton’s sleep, he certainly is trying to push her—and the Democratic Party with which he caucuses—further to the left economically.

Extreme Pro-Tax Stance

Since announcing his candidacy on April 30, Sanders has made his fiscal priorities plain. He would:

  • Potentially tax incomes with a 90 percent marginal rate.
  • Block trade deals such as the Trans-Pacific Partnership, President Barack Obama’s 12-nation free trade pact.
  • Work to repeal the Citizens United Supreme Court ruling that corporations and unions have the same right to contribute to political campaigns as individuals.

There’s more, but it’s Saunders’s tax plans, which he suggests might restore the tax rates that existed during the Eisenhower Administration, that have created the greatest stir. Others on the left, including Senator Elizabeth Warren, D-Mass. (also touted as a possible candidate), may hold similar views, but Sanders’s pro-taxation stance really stands out.

Sanders has generally remained pro-taxation over the years, first as a congressman and then as a senator. Here is his voting history on taxes:

  • In 2000, he voted against eliminating the marriage penalty on income tax rates (although he voted in favor in 2004) and against $46 billion in tax cuts for small businesses, both of which would have helped ordinary Americans.
  • In 2001, he voted against eliminating the estate tax, which adversely affects small-business heirs, and against a $958 billion tax cut over 10 years.
  • In 2002, he voted against making the Bush tax cuts permanent, even though those cuts applied to anyone who pays income taxes.
  • In 2006, he spoke against cuts in tax rates on capital gains and dividends, calling them a giveaway “to the wealthiest people in this country,” even though they also benefit the middle class.
  • In 2008, he voted to boost taxes on millionaires, which would have impeded their ability to invest in job-creating enterprises.

Sanders’s voting record against tax cuts reveals that, despite his views on taxation as a way to even the playing field for Americans, his way could end up hurting rather than helping middle-class Americans and the economy.

The Bottom Line

What if, against all odds, Senator Bernie Sanders were elected, or if other Democrats adopted his views?

We find the answer in a couple of recent books. In “How Money Walks” (2013), which discusses how different tax rates affect the movement of people and capital from state to state, economist Travis H. Brown’s words on the income tax resonate: “Real economic expansion … does not happen when tax regimes are unfriendly to income and investment” (p. 239).

Wealth of States” (2014), authored by four prominent economists—Arthur Laffer, Stephen Moore, Rex A. Sinquefield, and Travis H. Brown—expands on this analysis. The authors say that “raising a state’s highest personal income tax rate by one percentage point will be associated with a reduction of 1.8 percentage points in that state’s gross state product growth over a 10-year period.” They add, “What a diabolical trade-off that is” (p. 145).

If higher personal and corporate income taxes can depress a state’s economic growth, how much more might Senator Sanders’s tax agenda hurt our nation?