Thread by @RachelAzzara

1. Since Bernie has put this out here, I do hope there are some probing questions in tonight's #DemDebate2020 in #SouthCarolina. I'm going to use this thread to try to dig into the details of his funding plan without getting too wonky.

https://twitter.com/BernieSanders/status/1232129196937416705

2. He starts off with his $2.2 Trillion plan to cancel student debt. He plans to pay for it with a Wall St. speculation tax estimated to raise $2.4 Trillion over 10 years. It does seem like a plausible funding stream and he cites an abstract: tandfonline.com/doi/abs/10.108…

3. It works by placing a 0.5 percent tax on stock trades – 50 cents on every $100 of stock – a 0.1 percent fee on bond trades, and a 0.005 percent fee on derivative trades. Researchers suggest it could raise $220 Billion/yr.

4. This bill (Inclusive Prosperity Act of 2019) is currently in the House with 31 cosponsors and the Senate with 1 cosponsor. It does not have bipartisan support. It was previously introduced by Keith Ellison in 2012 and 2015. This would need a Dem majority and a lot of hustle.

5. Bernie plans to expand and extend the solvency of Social Security by "making the wealthiest 1.8 percent of Americans – those with incomes over $250,000 a year – pay the same rate into Social Security as working families."

6. So, this is the current tax info for FICA payments for 2020. Employee (7.65%), Employer (7.65%), Self-Employed (15.3%) on income up to $137,700. (note, that's Social Security, Medicare is 1.45% on ALL earnings + additional 0.9% for earnings over $200K.
ssa.gov/news/press/fac…

7. It appears there is a protected zone between $137,700K and $250K (?) - but then you start paying at the same 7.65%. So:

$250K - $19,125 (employer) $19,125 (employee) $38,350 (self-employed)
$400K - $30,600 (employer) $30,600 (employee) $61,200 (self-employed)

8. Without this change in threshold, both the employees and employers in the above example would only be paying $10,534.05. I think it's safe to say the maximum benefit will not change much, even if premiums into SS double, triple or more for higher salaries.

9. Bernie funds his affordable housing plan, universal childcare and part of Medicare for All with a wealth tax that applies to net worth of over $32 million and he estimates would raise an estimated $4.35 trillion over the next decade.

10. Let's start by talking about the problems with a wealth tax and then I'll talk about his plan. It's not a new idea and has been tried quite a bit in Europe. In 1990 there were around a dozen countries with it, now only 4 - Belgium, Switzerland, Spain and Norway.

11. Belgium, Spain and Norway don't generate a ton of money - roughly 0.5% - 1.5% of their revenue. Switzerland does well, bringing in upwards of 3%, but they have a decentralized tax system and the wealth tax affects the middle class, too.

businessinsider.com/4-european-cou…

12. So, what's the problem?

- people hide assets or leave the country
-people are asset rich, but cash poor
-it's expensive and difficult to enforce
-it's expensive to set up and administer

13. It's not uncommon for regular people to shift and hide assets when faced with decisions about long term care solutions for aging family members - it's the same premise, just on a much larger scale and for greedier reasons. So, how do you get compliance?

14. Bernie believes he can stop evasion by:

- creating a national wealth registry and third party reporting (not sure who these 3rd parties are)

-have the IRS audit 30 percent of wealth tax returns for the 1% bracket and a 100% audit rate for all billionaires

15. - including a 40% exit tax on the net value of all assets under $1 billion and 60% over $1 billion for all wealthy individual seeking to expatriate

- enhance the intnat'l tax enforcement and anti-money laundering regime and strengthen the Foreign Account Tax Compliance Act

16. There is, of course, also the issue of constitutionality, which Sanders does address on his website. He offers this opinion written on the ABA's site: americanbar.org/groups/taxatio…

17. My initial takeaway on this is that it's very difficult to predict this estimate of $4.35 trillion. All evidence is that this is an idea that sounds a lot better on paper than in reality.

18. It won't pass through Congress. I think while people might be okay with "taxing the rich", the idea of a "wealth registry" seems off-putting. The Libertarians are going to go mad. Even in it's most optimistic light, it's going to take a lot of ramp up.

19. Bernie also has a proposal to eliminate all $81 billion in medical debt. He wants to pay for it with an Income Inequality Tax on large corporations that pay CEOs at least 50 times more than average workers. I actually like this idea - more regulatory than anything.

20. Okay - on to the Green New Deal. He estimates it will cost $16.3 trillion and create 20 million union jobs. Of course, there will be job loss, too - as with M4A. He says he has it fully paid for by:

21. (Green New Deal - funding)

* Raising $3.085 trillion by making the fossil fuel industry pay for their pollution, through litigation, fees, and taxes, and eliminating federal fossil fuel subsidies.

22.
* Generating $6.4 trillion in revenue from the wholesale of energy produced by the regional Power Marketing Administrations. This revenue will be collected from 2023-2035, and after 2035 electricity will be virtually free, aside from operations and maintenance costs.

23.
* Reducing defense spending by $1.215 trillion by scaling back military operations on protecting the global oil supply.

* Collecting $2.3 trillion in new income tax revenue from the 20 million new jobs created by the plan.

24.
* Saving $1.31 trillion by reduced the need for federal and state safety net spending due to the creation of millions of good-paying, unionized jobs.

* Raising $2 trillion in revenue by making large corporations pay their fair share of taxes.

25. The Green New Deal funding has perhaps the most nebulous explanation. There's a lot of speculation and uncontrollable variables in this. How can you know what you'll generate through litigation? What about major foreign affairs crises? There is little concrete revenue here.

26. Now, for Medicare for All. Roughly $30 trillion, give or take a few trillion. He starts with a 4% "income-based premium", exempting the first $29K for a family of 4.
(Revenue raised: About $4 trillion over 10 years.)

27. So, a household making $150K a year would be paying $4840. A household making $250K a year would be paying $8840. Now, if you're an individual making $250K, you're going to pay $8840 + $19,125 from the FICA changes + your regular taxes.

28. Of course, you won't be paying your regular premiums or (nearly any?) medical costs. The higher your medical costs and lower your income - the more benefit. The line where the benefit disappears is joint filers with $6,000 in annual medical expenses and $175,000 in income.

29. There will also be a 7.5 percent income-based premium paid by employers, exempting the first $1 million in payroll to protect small businesses.

(Revenue raised: Over $5.2 trillion over 10 years.)

30. He points out that employers pay an average of $14,561 in private health insurance premiums for a worker with a family of four. Under this option, employers would pay just $4,500 – a savings of more than $10,000 a year. (This would be based on a salary of $60K).

31. Note that small businesses are defined as 10-49 employees, under 10 employees are micro-businesses. You could have around 15 employees making $60K or under and stay under the million dollar exemption.

32. Also note that since your employer is no longer paying your premium, you will likely receive that as salary compensation that will be taxed as income, as health tax expenditures will no longer apply. Employers and employees should remember that if using a tax calculator.

33. I don't think you can say businesses will come out better across the board on this - different industries have different demographics of employees and their insurance costs would reflect that.

34. Additional revenue sources include:

-Eliminating health tax expenditures - $3 trillion/ 10 yrs.

-Raising the top marginal income tax rate to 52% on income over $10 million - $700 billion/ 10 yrs.

35.
-Replacing the cap on the state/local tax deduction $50,000 for a married couple - $400 billion/ 10 yrs.

-Taxing capital gains as wage income and cracking down on gaming through derivatives, like-kind exchanges, and the 0 tax rate on capital gains passed on through bequests

36. -$2.5 trillion/10 yrs.

- For the 99.8% Act, which returns the estate tax exemption to $3.5 million, closes egregious loopholes, and increases rates progressively including by adding a top tax rate of 77% on estate values in excess of $1 billion.
-$336 billion/ 10 years

37.
-Enacting corporate tax reform including restoring the top federal corporate income tax rate to 35%.
-$3 trillion , $1 trillion for M4A and $2 trillion for Green New Deal.

-And, of course, using $350 billion of the wealth tax.

38. There's a lot to digest, but in the end, I not only don't see a path for most of the policies, but I also don't see a path for passing the funding options. Congress controls the purse. Congress makes the tax law. Where's the bipartisan support for any of it?