From TaxVox: Sanders’s domestic program would help most households, but add more than $18 trillion to the debt

May 10, 2016

Most American families would receive new government benefits that would exceed their higher taxes under the domestic policy agenda of Democratic presidential hopeful Bernie Sanders. But even though Sanders would raise taxes on nearly all households by a total of more than $15 trillion over the next decade, his plan still would add an additional $18 trillion (plus at least $3 trillion in interest) to the national debt over the period—an unprecedented increase in government borrowing.   

After the Tax Policy Center estimated in March that Sanders would raise taxes across all income levels, his advocates complained that TPC and others were ignoring the senator’s ambitious new spending plans. They argued that when you include those proposals, such as free health care and college education, more generous Social Security benefits, and 12 weeks of family leave, most Americans would be better off than they are today, even if they’d pay higher taxes.

So with the help of the Urban Institute’s Health Policy Center and Income and Benefits Policy Center, TPC has estimated the net effect of Sanders’s tax and spending plan. This collaborative analysis found that Sanders is mostly right: for 95 percent of households, his plan would increase average government benefits by more than it would raise their average tax bill. And the changes would be highly progressive. Low- and moderate-income households would see a positive net benefit, on average, while the highest-income 5 percent would pay substantially more in taxes than they’d receive in new government transfers.

But…and there is a very big but. The analysis found that Sanders’s $15 trillion tax increase would pay for less than half the cost of his proposed new spending. Even with tax increases of a magnitude not seen since World War II, Sanders’s domestic agenda would still add $18 trillion to the national debt over 10 years—plus at least another $3 trillion interest costs. Nearly all of that increase would be due to his Medicare-for-all health plan.

Read the rest on TaxVox.

SHARE THIS POST