Bernie Sanders, a man whose entire existence has been funded by the earnings of people who work for a living, has famously proposed to spend even more of other peoples’ money, to the tune of $18 trillion or so, over the next 10 years. This is in addition to what the USG is
currently spending, which, as a percentage of GDP, is at WW2-era levels of spending, and last I saw, we weren’t driving Shermans through the Ardennes on the way to Berlin. Call it an additional $1.8 trillion per year, over and above the 2015 benchmark spending level of $3.69 trillion per year.
A trillion here, a trillion there, pretty soon we’re talking serious money.
Well. Where are all these massively underutilized dollars going to come from, anyway, so the federal government can correctly spend them for us? Is $18 trillion sitting under a really large number of mattresses?
As it turns out, the answer to the mattress question is “No”, and even an economic simple Simon like Sanders (apologies to Simons everywhere, simple or otherwise, excluding an apology to Sanders) can look at the data and understand that, but he doesn’t want to. Why? Because he doesn’t have to, that’s why – he can easily peddle “free” to people who still believe in such things as, well, things not having a cost, to them or others, because there’s never a shortage of people who will line up for something they did not earn.
Bernie’s selling point is that The Rich ™ can and will pay for it, a canard that has been used by such other lovely humanitarians like Lenin and Mao, whose actions resulted in the deaths of tens of millions. But instead of pointing out history to a reality denier like Sanders, let’s look at the actual income paid into the IRS at all income levels, and see what’s actually there to be taxed. All data courtesy of the IRS.
In 2013, the modified taxable personal income total was $6.4 trillion. Total taxes generated were $1.265 trillion. But take a look at where the bulk of those tax revenues came from – they came directly from the middle class, not the “rich”. Any plan of Sanders that involves increasing taxes to pay for additional spending will come directly out of middle-income pockets.
Why? Because the “rich” often don’t earn a salary, they earn income off investments, which is taxed at a different rate, and is money actually risked in the economy. Secondly, if someone has a million dollar home, they might be considered rich in assets, but you can’t install an ATM on the side of your house to give you cash from the asset on your way to the supermarket. That asset can be converted to dollars (through a loan against the asset) or sold, but it’s not income that can be taxed.
In fact as a percentage of total taxes paid, the $100,000 to $200,000 bracket bears the biggest federal income tax smack of anybody. Now, in Sanders’ world, $200,000 might sound like a “rich” person, but a married couple earning $75,000 apiece, for $150,000 in total household income, would probably not be perceived as rich by anyone who knows what a mortgage payment on a simple $200,000 home is, and if a child comes along, well, those incomes start looking even smaller.
The income brackets from $50,000 through $500,000 constitute 66% of all income taxes collected. These brackets are the ones that are currently the hardest hit in terms of tax burden. It’s where the potential income is to be taxed in the first place.
So anything Sanders proposes in terms of new taxes will be disproportionately burdened on the very families he preaches he’s going to take care of.
Where would Sanders get that additional $1.8 trillion of annual spending? In order to generate that additional $1.8 from the $50K-$500K brackets, he would have to double the effective income tax rate. Double it. Raise your hand if you’ve seen Bernie mention doubling the middle-class income tax rates.
Now, Bernie wants a blend of additional tax increases and revenues, so it would not fall entirely on the middle-class, but since income taxes constitute about half the USG’s tax revenues, that’s where the biggest hit will have to come from. It’s not a choice.
But to make it worse, half the country pays no net income taxes. Yet they get to vote in the economic duferati like Bernie Sanders, who has promised to give that half something for nothing, again, and has ridden that mantra all the way through Iowa. Greed sells, it seems, but only Bernie seems to think it’s corporations that are greedy. When the people who are apparently not too busy to be working at an actual job rush out to see him on the campaign
trail, waving “Free College!” signs, it’s fair to ask: Who’s the greedy one here?