From TaxVox: The fiscal legacy of Bernie Sanders’s surprising presidential candidacy

June 17, 2016

Bernie Sanders, the democratic socialist Senator from Vermont, surprised almost everyone by waging a very strong campaign for president.  However, it is now clear to almost everyone that he won’t be the Democratic Party’s nominee. 

While it is sometimes hard to notice, this election campaign has been full of interesting ideas, and Sanders has contributed a fair share. Some may even outlive his political aspirations. Here are a few of his best and worst ideas.

  • A carbon tax. Sanders was the first presidential candidate to propose a carbon tax, which is a market-based approach to addressing climate change. The idea is a favorite among economists from across the political spectrum. It might command bipartisan support if the two parties actually could work together and Republicans could cure their pathological aversion to taxes of any kind. Indeed, in 2008, Republican presidential candidate John McCain proposed his own market-based solution to climate change—an emissions trading system.
  • A financial transactions tax. Sanders was also the first presidential candidate to propose a significant tax on securities transactions. (Hillary Clinton proposed a vague but tiny tax on high-frequency trading.) Sanders’s rhetoric suggests that he thinks that Wall Street is the financial equivalent of air pollution, and his proposed tax rate was so high that it would discourage productive as well as unproductive trading and bring in much less revenue than he hoped. Nonetheless, many other countries are considering financial transactions taxes and a well-designed version could be a significant source of revenue in the US without an undue toll on the economy.
  • Huge, transparent tax increases on the rich. While Clinton would raise taxes on high-income households through various minimum taxes and other obfuscations, Sanders gets credit for relative transparency with his straightforward higher tax rates on the rich. No sleight-of-hand and needless complexity. His plan would have raised top tax rates on capital income to 64 percent and on labor income to over 70 percent. The drawback, however, is that such high rates are almost surely unsustainable.

Read the rest on TaxVox.