From The Washington Examiner
Last week, the IRS released its annual Statistics of Income. This much-anticipated document is exactly what it sounds like: a thorough analysis of taxpayers' incomes and payments to the IRS, this time for 2018.
Each year, these numbers are illuminating for a number of reasons. For one thing, they show the progression of tax payments over time. For example, revenues have continued to rise since the Tax Cuts and Jobs Act lowered income tax rates for everyone. And the number of filers taking the mortgage interest deduction plummeted from 33 million in 2017 to just 13 million in 2018, as more taxpayers took advantage of the new and far more generous standard deduction.
There are also important lessons about income classes. Out of 147 million IRS tax filers in 2018, just 0.3% (about 500,000) had incomes above $1 million. These earners and families made 17% of all taxable income in 2018 (just shy of $1.5 trillion) and paid 28.6% of all income taxes. That is significantly more than they would pay in a strictly proportional system, and of course, it doesn't count state or local income taxes or the business taxes that high earners often pay.
Meanwhile, the 85 million filers at the bottom of the pay scale faced a justly and reasonably lower tax bill. Those reporting incomes of $50,000 or less (more than half of all filers) shouldered just 5.5% of the nation's total income tax bill.
This goes to show that the United States has a tax system that favors those with lower incomes and demands a fair share, by any reasonable definition, from millionaires and billionaires.
But it demonstrates much more than that. It also shows, once again, that there is no way, through merely raising taxes on the richest of the rich, that anyone could ever hope to fund a massive government medical system or an environmental transformation of the economy. This remains true even if you extend punitive taxation to mere quarter-million-dollar earners — the top 3.64% of filers, who reported making more than $250,000 in income in 2018. This group also paid an outsized amount in taxes — 54.71% of all income, capital gains, dividends, and self-employment taxes collected by Uncle Sam. But even this larger group made only $3.24 trillion in taxable income.
And so, even if they could be taxed at a 100% rate (an impossibility), their income would not quite cover the most conservative estimates of what "Medicare for all" would cost. In a less unrealistic scenario, in which this group's tax payments could be raised by 10% without affecting the economy at all, the federal Treasury would gain by less than $90 billion per year — not even close to the cost of providing everybody with generous healthcare benefits, let alone the tens of trillions of dollars of additional costs associated with the Green New Deal.
The bottom line in the IRS numbers is that Vermont Sen. Bernie Sanders is right when he says he has no idea how much his plans would cost. To be more accurate still, he really has no conception of the federal budget overall or the national tax base. His plans would require much higher taxes on middle-income and even lower-income earners. This idea of the poor paying more in taxes is, in fact, characteristic of the European social democracies that Sanders constantly extols, although he never seems to want to bring that part up.
To the extent that he concedes the middle class would have to pay more in taxes, he claims that it would be more than offset by benefits of government-run healthcare. But Emory University health finance expert Kenneth Thorpe, looking at an earlier version of the Sanders plan, found that "over 70% of working privately insured households would pay more under a fully funded single-payer plan than they do for health insurance today."
Sanders's rhetoric about the wealthy is basically just blowhard nonsense. He tries to seem knowledgeable by hiding behind discredited ideas of socialism that remain popular among academics, but he's basically just preaching innumeracy.
REPRINTED FROM THE COLORADO SPRINGS GAZETTE
Photo credit: stevepb at Pixabay