Never before has there been a presidential campaign where one party was running on a platform of massive tax increases and unimaginable spending.
The question is, are we getting the whole story?
Statements like, “the income of the top 20% of households is 60 times as much as the bottom 20%” can be heard day after day. Simple, direct, easy to understand, and a good media sound bite, but is it true? No.
The bottom 20% households earn, on average, about $4900 (a very low number because so many have no income at all) while the average top 20% household earns $295,900, a ratio of 60 to 1. But it is not 60 to 1, not even close. Here is why.
The top 20% earn an average of $295,900 and pay $109,100 in taxes; left with $186,800 in, what I will call, available resources. Conversely while the bottom 20% pay no income tax they are the principal recipients of $1.9 trillion in annual public transfer payments. The average low-income household receives $45,400 in government transfers and $3,300 in charitable funds. They pay $2,700 in sales and property taxes.
The average bottom 20% household has $50,900 available resources ($4,900 plus $45,400 plus $3.300 minus $2.700)
So, the income inequity, touted particularly by candidates Warren and Sanders, is not 60 to 1 ($295,900 vs $4,900) it is actually 3.7 to 1.
One problem with the math is that the progressive/socialist democrat candidates lay out their programs piecemeal. Today it is X dollars for education, the next day it is green stuff, then Medicare for All, and on it goes. As each is presented there is occasionally a feeble attempt to define how a particular program will be paid for. But what they never do is articulate the totality of it all, spending and revenue. So, let’s take a stab at that using projected costs and revenue over the next 10 years.
Medicare for All: $32 trillion
Green New Deal/climate change: The American Action Forum estimates that the energy and environmental components would cost $10 trillion.
Free college tuition: $800 billion
Cancel student debt: $1.6 trillion
Open borders: Illegal immigrants currently cost $116 billion per year. Open borders could easily multiply that by a factor of 3 or $3.5 trillion over 10 years.
K-12 education: $800 billion
Child care plan: $1.07 trillion
New infrastructure: $1 trillion
Expanded tax credit to the poor: $2.5 trillion
Affordable housing: $1.9 trillion
Slavery reparations: Not included but estimates range from $17-50 trillion
The total cost is $54 trillion in new proposals over the next decade, on top of the $12.4 trillion deficit projected by the Congressional Budget Office.
Over the next decade the federal government is projected to collect about $4.4 trillion per year and spend about $5.6 trillion. This is without taking into account a single one of the progressive/socialist democrats’ new proposals cited above.
In order to pay for the above campaign promises, we would need to increase the federal government revenue from $4.4 to $9.8 trillion per year. That cannot possibly happen and even if it could be accomplished the national debt would still increase from today’s $21 trillion to $34 Trillion in a decade; dangerous territory.
Then there are the proposals to “tax the rich.” Increased revenue estimates range from $9.3 trillion under the best-case scenario and, more realistically, $3.9 trillion over the next ten years. In other words, if these politicians want to spend what they propose, they’ll have to impose enormous taxes on everyone who pays taxes including the middle class.
Additionally, draconian tax increases either across the board or just on the rich has some very scary side effects. For example, A 70% tax rate on the rich may be smart politics, but it is not smart economics. Economists explain that higher tax rates on the rich have the potential to reduce capital formation, lower economic output, shrink the labor supply, depress levels of entrepreneurship, lead to lower middle-class wages, reduce economic mobility, drive away superstar inventors, lower levels of innovation, lead to higher taxes for everyone else, and encourage tax complexity. In other words, the potential to dramatically and negatively transform our economy.
These numbers are not partisan. They come from the Congressional Budget Office, top liberal think tanks, Wall Street Journal editorials, and various economists’ studies. While these numbers are not exact and estimates are constantly changing, they paint a picture of the absurdity of the progressive/socialists democrat collective campaign promises.
In every campaign we hear people say, “politicians will say anything to get elected” and just pass it off as harmless rhetoric. These numbers are not harmless. They are scary, dangerous and have the potential to severely alter the foundations of this country. Wake up America.
Marv Covault