- The List of Democratic Presidential Candidates has Now Dropped to Two.
- Sanders has Proposed a Very Progressive and Socialist Style Tax System.
- Joe Biden's More Moderate System has Caused Many Voters to Turn to Him.
Now that the Democratic presidential field has been narrowed down to two candidates, it’s worth taking a more direct look into the candidates’ proposals. Democratic presidential candidate Bernie Sanders, a self-described Democratic-Socialist, has proposed highly progressive tax reforms in order to alleviate income inequality and pay for his extensive social programs.
Sanders has laid out a plan to institute a wealth tax, which taxes the money and assets individuals have saved, rather than the money that they’re currently earning. It’s worth noting that a wealth tax would tax previously taxed wealth, effectively taxing income twice. Sanders’ wealth tax would take effect on households worth $32 million dollars or more and would tax them at a rate of 1-8% a year, depending on their worth.
Sanders’ income tax proposals would progressively increases taxes on the majority of earners. Under Sanders’ plan households making over $29,000 a year will see at least a 4% increase in their taxes and the top tax rate will be raised to 52%. Businesses also take a hit under Sanders’ plan which calls for all mid and large sized companies to pay a new tax of 7.5% on all employees’ salaries.
Sanders’ plan would also increase the tax on companies based on the pay gap between the company CEO, or highest paid employee, and the median salary of company employees. The tax would progressively increase based on the size of the gap, with many companies paying an additional 5% in taxes. Sanders also put forth a plan to raise the corporate tax rate from 21% (where it stands today) to 35%.
Sanders has additionally proposed a .5% tax on all stock trades, in order to decrease investment speculation. A seemingly small figure, but considering that many retirement and savings funds are actively traded, a .5% tax on every trade can quickly add up. For example, If you make just 10 trades a year, you’ve lost 5% of your funds, which is half the annually expected return for most investment accounts.
Sanders’ plan has energized many young voters who feel that the country’s high earners and corporations should be held accountable with higher taxes and stricter regulations. This is, of course, despite the fact that the US already has a highly progressive tax system. Bernie’s proposals have drawn criticism due to their socialist nature and subsequent likelihood to slow economic development, disincentivize innovation, and hinder investment.
Because of this many Democrats have flocked to Joe Biden who offers a more moderate approach, and, who many voters feel, is more electable and thus has a better chance of beating President Trump. This seems similar to the phenomenon that occurred in 2016 when Democrats attempted to play it safe will Clinton, but ultimately lost the election.