Not Even a 100 Percent Tax Bracket for Millionaires Could Fund All of Kamala Harris’ Presidential Promises

Joshua Roberts/Reuters

Sen. Kamala Harris (D-Calif.) recently announced her bid to be the Democratic Party’s candidate to take on President Donald Trump in 2020. Along with her presidential announcement, she endorsed a series of left-leaning policies.

As IJR reported earlier, Harris used her campaign announcement to endorse positions touted by the most left-leaning members of the Democratic Party, including “Medicare-for-All,” tuition-free college, and universal pre-kindergarten public education.

“I am running to declare once and for all that health care is a fundamental right, and we will deliver that right with ‘Medicare-for-All,'” Harris said. “I am running to declare education is a fundamental right, and we will guarantee that right with universal pre-K and debt-free college.”

While Harris had a lot to say about why she believes these programs should be guaranteed to the American people via the government, she didn’t have a lot to say when it came to funding these programs.

What’s it going to cost?

In the same way that health care and college tuition places a burden on American families, “Medicare-for-All,” debt-free college, and universal pre-K won’t come cheap to the American taxpayer.

As IJR previously reported, a study by the Mercatus Center found that “Medicare-for-All,” as proposed by Sen. Bernie Sanders (I-Vt.), would cost north of $32 trillion over 10 years. The Mercatus Center is a libertarian-leaning organization funded largely by the Koch Brothers at George Mason University.

Sanders also proposed a plan to eliminate tuition at public colleges and universities. The Tax Policy Center claimed this program would run the American tax base $807 billion over a decade. The Tax Policy Center is a liberal center housed under two other think tanks, the Urban Institute and the Brookings Institute, both of which have been described as center-left or independent.

As for universal pre-K, the Committee for a Responsible Federal Budget (CRFB) estimates the cost to be around $190 billion over 10 years. The CRFB is a nonpartisan nonprofit that focuses on research on federal budget issues and fiscal policy.

Looking at just these three policies, our approximate calculation shows Harris’ policies running the American taxpayer just under $33 trillion over a decade.

How will Americans pay for it?

It’s obvious that the American government would need to increase its revenue to even attempt to fund these ventures, and Democrats haven’t shied away from that fact.

The most vocal proponent of raising taxes is Rep. Alexandria Ocasio-Cortez (D-N.Y.). The freshman congresswoman took the left by storm and might be a front-runner for president if she were old enough to run.

While she may be popular on the left, she ruffled some feathers on the right when she proposed a 70 percent tax bracket for Americans who make over $10 million to pay for policies like “Medicare-for-All.”

A note on tax brackets

There have been some misconceptions about Ocasio-Cortez’s 70 percent tax rate proposal impacting every American taxpayer, which isn’t true. She’s gone to bat over this point on Twitter.

Tax brackets only impact the next dollar earned beyond the set income limit.

For example, the current highest tax bracket is 37 percent on incomes over $500,001 per single filer. So if an individual earned exactly $500,001, only one dollar would be taxed at 37 percent and most of the remaining $500,000 would be taxed at 35 percent.

The U.S. Tax Brackets

Screenshot/NerdWallet.com

The U.S. currently has seven tax brackets, but that can change. For example, in 1935, there was a tax bracket for those earning over $5 million. At the time, that was only one American: John D. Rockefeller.

The federal government can adjust these tax brackets at any time, and if any of Harris’ proposals passed, Congress would need to make a change.

As far as Ocasio-Cortez’s 70 percent marginal rate for those earning over $10 million, Penn Wharton, the University of Pennsylvania’s business school, calculated that it could bring in a revenue of $382 billion over 10 years, using the most optimistic estimation. That’s nowhere near enough to cover the approximately $33 trillion dollar tab.

Can we just make millionaires pay for it?

Several people have joined Ocasio-Cortez in asking for wealthy Americans to pay more. Harris claimed that she would provide tax relief for the middle class while turning to the wealthiest Americans to foot the bill, but can the millionaires afford it?

In 2011, Paul Ryan made waves when he claimed that a 100 percent tax bracket on millionaires could only keep the government running for four months. Politifact checked this and, depending on the year, they found it to be mostly true.

So could a 100 percent tax bracket on anyone making more than $1 million per year cover Harris’ proposals for “Medicare-for-All,” tuition-free college, and universal pre-K?

Not by a long shot.

Using the most recent numbers available from the IRS, millionaires could have only paid in $1.36 trillion if they were part of a 100 percent tax bracket. That totals to just $13.6 trillion over 10 years. And according to Tom Church of the Hoover Institution, this number could be high by as much as 25 percent.

“You’d have to subtract out the taxes already paid by millionaire filers,” Church said, “which
include federal income or payroll taxes, along with state and local income or property taxes.”

The approximate calculation shows Harris being at least $19 trillion short, but the impact of the tax bracket could result in much less revenue over 10 years. As Church pointed out to IJR, these numbers assume that the American economy would remain static and void of any recession or boom, which is unlikely.

As former New York Mayor Michael Bloomberg said, these policies “would bankrupt us for a very long time.” Despite having not yet decided on a presidential bid for himself, Bloomberg told this to a group of pin factory employees while possibly testing the waters in New Hampshire.

Socialist side effects

Beyond the bankruptcy, the problem of quality remains. Even if Americans could somehow come up with the money to pay for these policies, the quality of the programs would likely decline.

As IJR reported earlier, “Medicare-for-All” may claim to provide coverage, but wait times and quality of care could drop. In an interview with Fox News, Dr. Marc Siegel, professor of medicine at New York University School of Medicine, said that working with Medicare as it stands today already means a “distant bureaucrat is approving or disapproving of some procedure” he thinks a patient needs. As IJR noted, he said this problem would be magnified by “Medicare-for-All.” 

Additionally, a tax rate like this could reduce the appeal of accruing wealth because all of it could go to the government. There would be less incentive to innovate or grow the economy without the personal gain.

As IJR reported, Harris attempted to walk back her proposal to abandon private insurance for a public option like “Medicare-for-All” after her comments caused outrage. She said she would be “open” to other options. Maybe that’s a sign she realized the American people can’t afford these policies.

What do you think?

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Rocky Drummond
Member

“MFA would cost north of $32 trillion over ten years” Mercator

Their SAME release also indicated that it would SAVE over $3T in the same timeframe! You keep on ignoring that little detail.

Sam Dorman
Member

This is really interesting. At a certain point, you can’t tax even the rich.

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