I have been promising for a few weeks to go into detail about how nutty Bernie’s tax proposals are, specifically when it comes to paying for medicare-for-all. Well, I finally saw the annoying and unofficial chart above one too many times, and I finally had my fill of watching liberals defend Bernie’s awful anti-liberal proposal.
I have two major problems with the proposal. One, it will raise taxes on the poor. Two, it will destroy small business.
First, the chart is not helpful. Look at it objectively. The IRS has four separate filing categories for taxpayers, and the chart simplifies the tax rate, making it less than it actually is.Let’s take an annual income of 30K. A single self-employed person will pay “$922.50 plus 15% of the amount over $9,225“. The same person making 40K will actually pay “$5,156.25 plus 25% of the amount over $37,450”, not the 15% the chart claims.
That is only income tax. Everyone must also pay medicare and social security tax. For individuals working for someone else that is 7.65%. But that is only half of the tax. Your employer pays the other half. The full tax is 15.3%. As a self-employed person you have to pay that all yourself.
So all self-employed small business owners pay an additional 7.65% in taxes right out of the gate.
Now Bernie wants to add a 2.2% tax on income, and a 6.2% tax on payroll. Self-employed pay their own payroll – they will have to pay both taxes – an additional 8.4%!
Under Bernie’s tax plan, becoming self-employed and starting your own small business will cost you an additional 16% in taxes right out of the gate!
That means that on an income of 625 a week, a self-employed person will pay $100 a week BEFORE even paying income tax. What do you think that will do to small business in this country?
Now let’s take Bernie’s claim that a family of four can make $28,800 and not have to pay his tax.
We will leave aside that for most businesses, payroll is one of the top expenses, and leave aside the question of what the average business might do if that cost was suddenly increased 6.2% – which is above the margin of profit for many businesses.
First, two adults making $28.8K means that on average they each make $14.4K a year. I can’t help being astounded that any liberal or progressive would actually advocate for raising taxes on anyone making $15,000 a year. As a progressive, my feeling is that people at that income should be taxed less than they currently are, if at all.
That’s before I even consider that many of the beneficiaries of this tax on the poor will be people who are upper middle class or wealthy.
And it is a tax on the poor. This is the most outrageous thing about Bernie’s plan. Poverty level for a family of four is $24,300 a year. For making $90 a week above poverty level, a family of four will have their taxes raised. And many of us far better off than that family will receive the benefit.
Now, I have been admonished many times: ‘but that family of four will actually save money because they will not have to pay for health care!’
But it’s not true.
If you are making a poverty level income, you already do not pay for health care. You will not ‘save’ anything, you will simply have an additional expense.
Take Florida. Like many states, Florida refused to expand medicaid to fill gaps in health insurance coverage. The Affordable Care Act allows that anyone making 138% of poverty level income in a state that has refused to expand medicaid is exempt from having to buy health insurance or pay a penalty. That means that same family of four mentioned in Bernie’s plan can make up to $33,534 a year as it stands now, and not face any additional expenses.
And health care is already a right. It is against the law for any hospital to turn away emergency cases, and against the law for a public hospital to turn away any patient. Health care is a right. What it is not is free. Not even Bernie is saying it should be free, as we can see from his tax plan.
Of course we need to improve our health care delivery system. Of course we need to reduce costs and expand coverage. But exacerbating an already unfair system while providing more benefits to the well-off is not the way to do it. No liberal or progressive in their right mind should be okay with raising taxes on people near the poverty level. No progressive in their right mind should be advocating for a poorly thought-out plan that tinkers with the tax code to fundamentally alter a sector that accounts for 18% of our economy.
What we need is a complete overhaul of the tax code, and the addition of a public option to the ACA, not an absurd plan to tax the poor and give benefits to the rich.