Democrats Aren’t Being Honest About Their Tax Plans

Bernie Sanders’ changes of winning the Democrat nomination for president are effectively nil, but that hasn’t stopped him from being the same feisty candidate who consistently pushed Clinton uncomfortably to the left, or at least, his version of the left.

The latest example came last week when Clinton and Sanders squabbled over raising classes on the middle class. Specifically, after Clinton publicly supported Philadelphia Mayor Jim Kennedy’s tax on sugary drinks to pay for expansion to the state’s pre-kindergarten program, Sanders pushed back.

“Frankly, I am very surprised that Secretary Clinton would support this regressive tax after pledging not to raise taxes on anyone making less than $250,000,” Sanders said. “This clearly violates her pledge. A tax on soda and juice drinks would disproportionately increase taxes on low-income families in Philadelphia.”

Sanders’ argument echoes one that conservatives have been making forever, but his myopic focus on the soda and juice tax is almost comical given the enormous tax increases that are built into his platform, many of which would fall on the middle class. Of course, you don’t hear Sanders talk about those taxes much, if only because politics dictate that the middle-class, which is already under siege by myriad economic forces, are off limits for new tax revenue. But, the simple fact of the matter is that the European-style social welfare states that Sanders’ looks to as policy guides tax the middle-class heavily.

As the left-leaning Jonathan Chait writes for New York Magazine:

The largest single impediment to the kind of welfare state most liberals favor is finding ways to pay for it. There’s more money to be raised by taxing only the rich, but not enough to finance the kind of social benefits American liberals would prefer. The most generous tax-and-transfer systems in the world — such as in Denmark, a country Sanders has cited as a model — do not tax the rich all that much more heavily than the United States does. The main difference is that they also tax the middle class heavily, and redistribute the proceeds further down the income scale.

Why don’t Democrats propose to raise middle-class taxes up to Scandinavian levels? The reason is simple: public opinion. Most Americans support raising taxes on the rich, but consider their own taxes too high. Their association with higher taxes on the middle class hurt Walter Mondale in 1984 and Michael Dukakis in 1988, and allowed Republicans to pose as champions of the middle-class pocketbook. For a quarter-century — since Bill Clinton’s 1992 presidential campaign — Democrats have worked around this weakness by steadfastly avoiding middle-class tax hikes.

The ideological inconsistency, driven by an implicit recognition of political reality, came brutally into focus with a recent Vox poll of Sanders voters that showed their unwillingness to fully finance his proposals.

“About 66 percent of Sanders supporters said they wouldn’t be willing to pay more than an additional $1,000 in taxes for universal health care. This includes the 8 percent of Sanders supporters who aren’t willing to pay anything at all,” author Alvin Chang writes.

That’s well below the 2.2 percent income surcharge and the 6.2 percent tax on earnings that Sanders’ has said will pay for his proposal, especially since economists estimate that the Sanders’ campaign is dramatically underestimating the program’s costs.

This type of critique applies most acutely to Bernie Sanders and his socialist-style reforms, but no Democrat is immune. Nearly all promise that government can grow by leaps and bounds without acknowledging what that will mean for the average American’s tax burden. It’s doubly unfair because even at current pace of spending growth, separate and apart from any discussion about expanding services, the government will inevitably have to raise taxes. Edward Lazear, former chairman of the Council of Economic Advisers and current professor at Stanford University, writes:

The debt held by the public has approximately doubled since President Obama took office and is now equal to 74% of gross domestic product. It is true that with the right policy mix, economic growth—stuck at just over 2% during the Obama “recovery”—will help close federal deficits and pay down the debt. At the end of World War II, for example, the debt-to-GDP ratio was at 104% and shrank to a low of 23% by 1974. But letting growth or future belt-tightening close the gap is the exception, not the rule. More often, higher taxes are the result.

Unfortunately, economic growth, and the higher revenues that result, is still not enough to keep pace with growth in entitlement programs like Social Security and Medicare that are set to soar as the Baby Boomers grow older. According to the CBO, the U.S. public debt will likely double in just over two decades unless dramatic changes are made.

In other words, Sanders’ was right to squabble over Clinton’s willingness to impose a tax on sugary drinks, but more importantly, Republicans are right to wail over both Sander’s and Clinton’s unwillingness to talk straight about what their big government plans mean for the middle class’ taxes.