thehill.com
Obama to push $10-per-barrel oil tax for green transportation plan
Obama will look to assess a $10 fee on every barrel of oil.
By Devin Henry

President Obama will propose a $10-per-barrel fee on oil production to fund a new green transportation plan, the White House announced Thursday.

The proposal would go toward a $32.4 billion annual push to green the transportation sector by funding public transit, an urban planning initiative and clean vehicle research, the White House said in a fact sheet. Obama will include the plan in the budget request he releases next week.

The plan will likely die in the GOP-controlled Congress, which will vet Obama’s budget request before writing spending bills later this year.

But the proposal represents a new front in Obama’s climate change end-game: After finalizing carbon reduction regulations for the electricity sector last year, he is turning his attention back to the transportation sector, which accounts for 30 percent of American carbon emissions every year.

“The president’s plan does what we need to once again have a transportation system that is a source of American strength while at the same time taking steps to reduce carbon emissions and fight climate change,” Jeff Zients, the director of the National Economic Council, told reporters Thursday.

Charging the fee to oil companies, the White House said, is both a funding mechanism for the transportation initiative and an incentive for the private sector to move toward cleaner fuel.

Bernie explains how raised taxes saves families thousands in health costs

Voter: “Senator Sanders, the first thing I hear about you is you’re going to raise taxes on the middle class. I support my family on a salary of $41,000 a year. I’m wondering, if you raise my taxes, how does that help me?”

Bernie Sanders: “Thanks very much for that good question. This is what we are going to do. The United States is the only major country on Earth that doesn’t guarantee health care to all people, and we end up spending far, for more per capita on health care as the people of any other country; Canada, UK, France, whatever. What we are gonna fight for is a Medicare-for-all, single-payer program which will provide comprehensive health care for your family and every family in America. So let me tell you what we do. We raise your taxes, you’re in about the middle of the economy, about 500 bucks, but you know what we’re gonna do for health care? We’re gonna reduce your health care costs by about $5,000. So you’re gonna pay a little bit more in taxes but you’re no longer gonna have to pay private health insurance premiums. Now I’ve been criticized for this, but I believe that healthcare is a right of all people; that we should not have these deductibles and co-payments; we should not be paying the highest prices in the world for prescription drugs. And our Medicare-for-all program will guarantee comprehensive health care to all people and save middle class families thousands of dollars a year.”

Moderator: [to voter] “Does that math work for you?”

Voter: “If it saves me on health insurance premiums, I’ll gladly pay more taxes.”

4

Bernie Sanders says what no other candidate will: “We will raise taxes.”

Breaking with decades of bipartisan political convention, Democratic presidential hopeful Sen. Bernie Sanders (I-Vt.) on Monday night reaffirmed that he would raise taxes on middle-income Americans to fund his Medicare-for-All health care plan. But Sanders claims the middle class will still save money.

Hey Bernie Sanders fans

You want the 1% to pay, what? 90% tax? For all those programs you want, let’s do the math

Say a man brings home one million dollars a year. His wife probably doesn’t work because why would you if your spouse is making that much money? You don’t need to work. If the wife does work, that’s okay, too, but for this example, let’s have the father be the only source of income. The couple has two kids and a dog. The man started in a low level job but worked his way up the ranks in twenty years, and now he’s the CEO or something up there.

Now, if you tax that man 90%, he will only take in $90,000 a year. That’s still a lot of money, don’t get me wrong, but it’s a lot different than currently, where the 1% is taxed approximately 70% already.

But, he still has to pay for his house monthly. Let’s say it’s about $5,000 a month if living in the Upper East Side of New York City. He’s already down $60,000 now.

The family is left with $30,000. He probably wants to send his children to private school in New York, right? It’s about $10,000 a year for each kid. With two kids, he’s down to $10,000 now.

He still has to pay for groceries and cell phone plans and electricity and plumbing and laundry and all those things.

But he should give to charity, too, right? Because he’s in the top 1% and that’s his humanly duty! right? With all of those bills piling up, he probably has $500 in his pocket a year. That’s more than some people, but still.

If a family of four plus one dog only has $500 a year to spend after all that, soon enough, they aren’t even going to have that. Prices will go up, he won’t have enough to donate to charity, rent could go up, his fridge breaks, his kid gets in a car crash.

He wouldn’t have enough money. Then, the one percent would shift to cover the next group of people. Those people were told–no promised that they wouldn’t be taxed, but the top one percent ran out money so someone has to cover the free education and free healthcare and whatever else free stuff you want us to have.

According to bankrate.com, if you get about $350,000 a year, you are the top one percent. I don’t know about you guys, but that’s not what I thought the top one percent was. I thought they would have more money.

You will dry the top one percent out of money. Then, everyone will have to pay for the taxes that they can’t afford because the taxes are already so high. Are you going to be happy when the top one percent only makes five bucks more than you?

zerohedge.com
Why Bernie Sanders Has To Raise Taxes On The Middle Class | Zero Hedge
"Because that's where the money is..." Every household earning below $250,000 will face a tax hike of nearly 9 percent. Past that, rates explode, up to a top rate of 77 percent on incomes over $10 million.

Willie Sutton was one of the most infamous bank robbers in American history. Over three decades, the dashing criminal robbed a hundred banks, escaped three prisons, and made off with millions. Today, he is best known for Sutton’s Law: Asked by a reporter why he robbed banks, Sutton allegedly quipped, “Because that’s where the money is.”

Sutton’s Law explains something unusual about Bernie Sander’s tax plan: it calls for massive tax hikes across the board. Why raise taxes on the middle class? Because that’s where the money is.

The problem all politicians face is that voters love to get stuff, but they hate to pay for it. The traditional solution that center-left politicians pitch is the idea that the poor and middle class will get the benefits, and the rich will pay for it.

This is approximately how things work in the United States. The top 1 percent of taxpayers earn 19 percent of total income and pay 38 percent of federal income taxes. The bottom 50 percent earn 12 percent and pay 3 percent. This chart from the Heritage Foundation shows net taxes paid and benefits received, per person, by household income group:

But Sanders’ proposals (free college, free health care, jobs programs, more Social Security, etc.) are way too heavy for the rich alone to carry, and he knows it. To his credit, his campaign has released a plan to pay for each of these myriad handouts. Vox’s Dylan Matthews has totaled up all the tax increases Sanders has proposed so far, and the picture is simply staggering.

Every household earning below $250,000 will face a tax hike of nearly 9 percent. Past that, rates explode, up to a top rate of 77 percent on incomes over $10 million.

Paying for Free

Sanders argues that most people’s average income tax rate won’t change, but this is only true if you exclude the two major taxes meant to pay for his health care program: a 2.2 percent “premium” tax and 6.2 percent payroll tax, imposed on incomes across the board. These taxes account for majority of the new revenue Sanders is counting on.

But it gets worse: his single-payer health care plan will cost 80 percent more than he claims. Analysis by the left-leaning scholar Kenneth Thorpe (who supports single payer) concludes that Sanders’ proposal will cost $1.1 trillion more each year than he claims. The trillion dollar discrepancy results from some questionable assumptions in Sanders’ numbers. For instance:

Sanders assumes $324 billion more per year in prescription drug savings than Thorpe does. Thorpe argues that this is wildly implausible.

“In 2014 private health plans paid a TOTAL of $132 billion on prescription drugs and nationally we spent $305 billion,” he writes in an email. “With their savings drug spending nationally would be negative.

So unless pharmaceutical companies start paying you to take their drugs, the Sanders administration will need to increase taxes even more.

Analysis by the Tax Foundation finds that his proposed tax hikes already total $13.6 trillion over the next ten years. However, “the plan would [only] end up collecting $9.8 trillion over the next decade when accounting for decreased economic output.”

And the consequences will be truly devastating. Because of the taxes on labor and capital, GDP will be reduced 9.5 percent. Six million jobs will be lost. On average, after-tax incomes will be reduced by more than 18 percent.

Incomes for the bottom 50 percent will be reduced by more than 14 percent, and incomes for the top 1 percent will be reduced nearly 25 percent. Inequality warriors might cheer, but if you want to actually raise revenue, crushing the incomes of the people who pay almost 40 percent of all taxes isn’t the way to go.

These are just the effects of the $1 trillion tax hike he has planned — and he probably needs to double that to pay for single payer. Where will he find it? He’ll go where European welfare states go.

Being Like Scandinavia

Sanders is a great admirer of Scandinavian countries, such as Denmark, Sweden, and Norway, and many of his proposals are modeled on their systems. But to pay for their generous welfare benefits, they tax, and tax, and tax.

Denmark, Norway, and Sweden all capture between 20-26 percent of GDP from income and payroll taxes. By contrast, the United States collects only 15 percent.

Scandinavia’s tax rates themselves are not that much higher than the United States’. Denmark’s top rate is 30 percent higher, Sweden’s is 18 percent higher, and Norway’s is actually 16 percent lower — and yet Norway’s income tax raises 30 percent more revenue than the United States.

The answer lies in how progressive the US tax system is, in the thresholds at which people are hit by the top tax rates. The Tax Foundation explains,

Scandinavian income taxes raise a lot of revenue because they are actually rather flat. In other words, they tax most people at these high rates, not just high-income taxpayers.

The top marginal tax rate of 60 percent in Denmark applies to all income over 1.2 times the average income in Denmark. From the American perspective, this means that all income over $60,000 (1.2 times the average income of about $50,000 in the United States) would be taxed at 60 percent. …

Compare this to the United States. The top marginal tax rate of 46.8 percent (state average and federal combined rates) kicks in at 8.5 times the average U.S. income (around $400,000). Comparatively, few taxpayers in the United States face the top marginal rate.

The reason European states can pay for giant welfare programs is not because they just tax the rich more — it’s because they also scoop up a ton of middle class income. The reason why the United States can’t right now is its long-standing political arrangement to keep taxes high on the rich so they can be low on the poor and middle.

Where the Money Is – And Isn’t

As shown by the Laffer Curve, there is a point at which increasing tax rates actually reduces tax revenue, by discouraging work, hurting the economy, and encouraging tax avoidance.

Bernie’s plan already hammers the rich: households earning over $250,000 (the top 3 percent) would face marginal rates of 62-77 percent — meaning the IRS would take two-thirds to three-quarters of each additional dollar earned. His proposed capital gains taxes are so high that they are likely well past the point of positive returns. The US corporate tax rate of 40 percent is already the highest in the world, and even Sanders hasn’t proposed increasing it.

The only way to solve his revenue problem is to raise rates on the middle and upper-middle classes, or flatten the structure to make the top rates start kicking in much lower. You can see why a “progressive” isn’t keen on making more regressive taxes part of his platform, but the money has to come from somewhere.

The bottom fifty percent don’t pay much income tax now (only $34 billion), but they also don’t earn enough to fill the gap. Making their taxes proportionate to income would only raise $107 billion, without even considering how the higher rates would reduce employment and income.

The top 5 percent are pretty well wrung dry by Sanders’ plan, and their incomes are going to be reduced by 20-25 percent anyway. It’s hard to imagine that there’s much more blood to be had from that stone.

But households between the 50th and the 95th percentile (incomes between $37,000 to $180,000 a year) earn about 54 percent of total income — a share would likely go up, given the larger income reductions expected for top earners. Currently, this group pays only 38 percent of total income taxes, and, despite the 9 percent tax hike, they’re comparatively spared by the original tax plan. Their incomes are now the lowest hanging fruit on the tax tree.

As they go to the polls this year, the middle class should remember Sutton’s Law.