Andrew Yang wants the government to give every adult in America a thousand bucks a month. There are around 250,000,000 of us, so that works out to about $3 trillion a year and would not quite double federal spending. (That’s roughly $3.8 trillion.) He would pay for it with a value added tax that he estimates would bring in less than a trillion dollars a year.
Math is hard, so I’m not sure how that works out in the real world, but I was able to do the math necessary to see the federal government already costs the average adult American over $15,000 a year.
Let’s assume that we’re willing to give kids a free ride until they reach 18. In that case, the average adult’s fair share (that is, the average tax rate) should be whatever proportion $15,000 is of the average income. Average income is about $47,000, so that implies a combined federal (FICA, income, excise, VAT, whatever) tax rate in the range of 32 percent. There aren’t enough rich to soak with the 70 percent max rate proposed by one of the B-Card Democrats won’t pull the average up that high.
Socialist governments traditionally do make a financial mess. They always run out of other people’s money. It’s quite a characteristic of them.
I think so, Brain … but if the Government would live within our means there might be something left for us too.
I think so, Brain … but even if the buck stopped here, there wouldn’t be much left after taxes.
The Foundation for Economic Education has a post up explaining how the rich could pay for that list of Progressive freebies: $47 billion on free college tuition; $1 trillion for new infrastructure; $1.4 trillion to write off student loan debt; at least $7 trillion on a Green New Deal; $32 trillion on “Medicare for All.” We can simply adopt tax schemes similar to those used in countries such as France, Denmark, Sweden, and Finland.
If Rep. Ocasio-Cortez and Sen. Warren want the federal government to collect European shares of national income, they will have to adopt European tax systems. That means higher income taxes on the middle class, higher payroll taxes, and higher consumption taxes. According to the Congressional Budget Office, raising $32 trillion in tax revenue would require adding 36 percentage points to the marginal tax rate of every federal income taxpayer in the United States. Not just the rich—everyone. The single woman earning $82,500 and the couple earning $165,000 would see their rates soar from 24 percent to 60 percent.
To borrow from P. J. O’Rourke, the good news is that the rich will pay for everything. The bad news is that you’re rich.
Finland collects about 43 percent of GDP in taxes, and that isn’t enough. Fuzzy Slippers reports at Legal Insurrection that Finland’s government has collapsed because of the cost of universal health care: #Bernie2020 hardest hit.
Finland has long been touted by American socialists as the socialist Nirvana, where everything is free and everyone is happy, happy, happy. Sadly, fiscal reality hit Finland’s government as it collapsed Friday due to the rising costs of its universal health care.
The warning signs were on the wall last spring when Finland … ended its experiment with “universal basic income.”
Bernie Sanders (I-VT), who has been hanging his socialist mantle on the “success” of Finland’s socialist structure, may be the hardest hit.
There ain’t no such thing as a free lunch.
I’m sure Paul Krugman thinks he made a morally justifiable argument in his recent NYT article supporting ¡Ocasio! She Guevara’s proposed higher tax rates, but he’s dead wrong on both the facts and his math. He wrote,
The controversy of the moment involves AOC’s advocacy of a tax rate of 70-80 percent on very high incomes, which is obviously crazy, right? I mean, who thinks that makes sense? … And it’s a policy nobody has ever implemented, aside from … the United States, for 35 years after World War II — including the most successful period of economic growth in our history.
It’s a fact that World War II ended in 1945. You can look it up.
It’s also a fact that the top U. S. personal income tax rates were cut from 70 percent to 50 percent in 1964. Paul Krugman could have looked that up in the NYT’s archives.
1964 – 1945 = 19 and 19 < 35.
Also, the peak period of post WWII economic growth in America was after that tax cut, a fact that Krugman would have also found if he researched his paper's own archives.
Space prohibits a full discussion of the impact of the tax cut, but current data show that inflation-adjusted G.D.P. increased 5.8 percent in 1964 after a 4.4 percent rise in 1963. Growth improved to 6.5 percent in 1965 and 6.6 percent in 1966. These were the three best back-to-back years for economic growth in the postwar era, and economists generally credit the Kennedy-Johnson tax cut for much of it.
Sometimes Truth just refuses to fit The Narrative.
UPDATE—To be fair to Paul Krugman, the Kennedy/Johnson tax cut became law just before his 11th birthday, so he probably has no real memory of the economic conditions he was writing about.
Jeff Dunetz has a post over at The Lid about ¡Ocasio! She Guevara’s “tax fairness” proposal. He quotes her as saying.
You know, you look at our tax rates back in the ’60s, and when you have a progressive tax rate system, your tax rate let’s say from zero to $75,000 may be 10 percent or 15 percent, etc. But once you get to the tippy-tops on your 10 millionth dollar, sometimes you see tax rates as high as 60 or 70 percent …
Uh, wrong! The 70 precent top rate on incomes above $100,000 was a holdover from the ’40 and ’50s. One of the key accomplishments of the Kennedy Administration in the ’60 was to get the top rate lowered to 50 percent as a means of stimulating economic growth. Even corrected for inflation, her imagined threshold income for the top rate is an order of magnitude higher than the ’50s value. She’s set her definition of rich too high.
In any event, her numbers don’t add up with the current distribution of incomes. Jeff includes the following table—The top marginal rate is now about 40 percent. If doubling the rate didn’t result in the rich moving more of their their assets offshore and the taxman could take twice as much money from them, one could expect about a 20 percent increase in revenue. Personal income taxes would increase 40, but personal income taxes are only about half of the government’s take. That would provide roughly 800 billion dollars a year, which would not quite offset the deficit expected before implementing She Guevara’s Green New Deal. In fact, doubling everyone’s taxes wouldn’t provide enough money to fund her schemes.
UPDATE—With her congressional pay, Ms. Occasional-Cortex will be entering the upper 5 percent of income earners. Perhaps this will provide her with the same sort of practical education experienced by other who have climbed the income ladder.