The same people who want ‘the rich’ to pay for everything also want to tax them out of existence. How will that work?
$47 billion on free college tuition; $32 trillion on ‘Medicare for All’; some vast but as yet unspecified sum on a ‘Green New Deal’. All of these spending proposals, and more, have been proposed recently. Where is the money going to come from?
‘The rich’ will pay for everything – Rep. Ocasio-Cortez
Don’t worry, some say, ‘the rich’ will pay for it all. In a recent interview, Rep. Alexandria Ocasio-Cortez, D-N.Y. suggested that her proposed ‘Green New Deal’ could be financed by a new 70% marginal tax rate on “the tippie tops” earners.
It isn’t clear how Rep. Ocasio-Cortez can say this with any confidence. After all, she has no idea how much it will cost. But it seems ever less fashionable to ask questions like ‘Who will pay for this?’
We need to eliminate ‘the rich’ – Also Rep. Ocasio-Cortez
And there is a further problem. If ‘the rich’ are going to pay for everything then somebody had better be rich. Indeed, such a system needs rich people to survive.
But some people want to eliminate with ‘the rich’, or their incomes, at least. In the name of reducing inequalities of income and wealth, a number of policymakers are now pushing for higher tax rates. These rates are not intended to raise revenue from the rich, but explicitly to stop there being anyone rich enough to raise revenue from.
Just 18 days after claiming that her higher taxes on “the tippie tops” would pay for her Green New Deal, Rep. Ocasio-Cortez was citing, approvingly, the idea that such rates were not, in fact, about raising revenue at all.
As so often in the 21st century, the dilemma is best captured by a meme.
If we plan to eliminate ‘the rich’, who do you think is going to pay for the spending commitments spewing out like bubbles at a foam party? It will be average, middle class Americans. According to the Congressional Budget Office, raising $32 trillion in tax revenue would require adding 36 percentage points to the marginal tax rate of every federal income taxpayer in the United States. Not just the rich — everyone. The single woman earning $82,500 and the couple earning $165,000 would see their rates soar from 24 percent to 60 percent.
To borrow from P. J. O’Rourke, the good news is that, according to Rep. Ocasio-Cortez, the rich will pay for everything. The bad news is that, according to Rep. Ocasio-Cortez, you’re rich.
John Phelan is an economist at the Center of the American Experiment.