Biden, Sanders tax plans would raise less revenue than claimed: studies

TheHill | 1/23/2020 | Naomi Jagoda
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Tax proposals from two leading 2020 Democratic presidential candidates, former Vice President Joe Biden and Sen. Bernie Sanders (I-Vt.), would raise less revenue than the campaigns say they would, according to analyses released Thursday by the nonpartisan Penn Wharton Budget Model (PWBM).

The analyses were released less than two weeks before the first-in-the-nation Iowa caucuses.

PWBM - Analyses - Thursday - Sanders - Proposal

PWBM released three analyses Thursday. One looked at Sanders’s wealth-tax proposal, and a second looked at Sanders’s proposal to expand the estate tax. The third examined nine tax changes proposed by Biden.

Sanders’s wealth tax proposal would create a progressive tax that starts with a 1-percent bracket for a married couples’ net worth between $32 million and $50 million and top out with an 8-percent bracket for couples' net worth above $10 billion.

PWBM - Sanders - Wealth - Tax - Revenue

PWBM estimated that Sanders’s wealth tax would raise about $3.3 trillion in federal revenue over 10 years without accounting for economic effects, and would raise $2.8 trillion after including macroeconomic effects. Those estimates are less than the $4.35 trillion that the Sanders’s campaign has said his wealth-tax plan would raise.

The PWBM researchers estimated that Sanders’s wealth-tax plan would result in gross domestic product (GDP) falling by 1.1 percent in 2050. That estimate follows the standard used by the nonpartisan Congressional Budget Office of applying the revenue raised by the tax toward deficit reduction. However, Sanders has said he’d use the revenue from his plan to help fund “Medicare for All” and to pay for his child care and housing plans.

Wealth - Tax - Households - Assets - PWBM

“The wealth tax discourages wealthier households from accumulating as many assets,” PWBM researchers said in its study of Sanders’s proposal. “This disincentive to save outweighs the effects of deficit reduction."

The report on Sanders’s wealth-tax proposal comes after PWBM released an analysis of the wealth tax proposed by Elizabeth Warren, another 2020 Democrat, last month. Warren’s wealth...
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