TaxProf BlogEditor: Paul L. Caron Friday, January 22, 2016 Bernie Sanders Releases Tax Plan: 54% Top Rate On Income, Capital Gains & Dividends, Double The Estate TaxBy Paul Caron
How Much Will It Cost and How Do We Pay For It? How Much Will It Cost? The Plan Would Be Fully Paid For By: A 6.2 percent income-based health care premium paid by employers. A 2.2 percent income-based premium paid by households. This year, a family of four taking the standard deduction can have income up to $28,800 and not pay this tax under this plan. A family of four making $50,000 a year taking the standard deduction would only pay $466 this year. Progressive income tax rates. Under this plan the marginal income tax rate would be:
Taxing capital gains and dividends the same as income from work. Warren Buffett, the second wealthiest American in the country, has said that he pays a lower effective tax rate than his secretary. The reason is that he receives most of his income from capital gains and dividends, which are taxed at a much lower rate than income from work. This plan will end the special tax break for capital gains and dividends on household income above $250,000. Limit tax deductions for rich. Under Bernie’s plan, households making over $250,000 would no longer be able to save more than 28 cents in taxes from every dollar in tax deductions. This limit would replace more complicated and less effective limits on tax breaks for the rich including the AMT, the personal exemption phase-out and the limit on itemized deductions. The Responsible Estate Tax. This provision would tax the estates of the wealthiest 0.3 percent (three-tenths of 1 percent) of Americans who inherit over $3.5 million at progressive rates and close loopholes in the estate tax. Savings from health tax expenditures. Several tax breaks that subsidize health care (health-related “tax expenditures”) would become obsolete and disappear under a single-payer health care system, saving $310 billion per year. Most importantly, health care provided by employers is compensation that is not subject to payroll taxes or income taxes under current law. This is a significant tax break that would effectively disappear under this plan because all Americans would receive health care through the new single-payer program instead of employer-based health care. |
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