House Representative Ocasio-Cortez has proposed a Green New Deal, and although that has not gained traction in the congress, most of the main budget items for which expenditures have been proposed are still on the table. The radical left, as well as those progressives standing by and permitting a socialist takeover of their political party, are still proposing massive expenditures and praising the Biden administration for the reckless, out-of-control expenditures of the last couple years. Let us consider briefly the primary expenditures proposed and the prospective revenues yet to be derived by insisting that of the very wealthy Americans (Big Guy Biden excepted) they pay their “fair share” of taxes.
First, the IRS says that families earning more than $600,000 annually compose the richest 0.9 percent of American families, so let us use that statistic for the richest 1 percent. In 2016, this richest 0.9 percent earned about $1.7 trillion in taxable income and paid about $530 billion in taxes. In a noteworthy article in the Washington Post (January 5, 2019) Jeff Stein wrote “Ocasio-Cortez wants higher taxes on very rich Americans. Here’s how much money that could raise.”
The Spending Menu
And how much will we need for the socialist vision of our ideal, green society? Raising enough to fund “Medicare for all” has been estimated to increase government outlays by about $30 trillion over a decade (while also zeroing out premiums and deductibles paid by Americans) our $3 trillion/year. Add to that the plan of Bernie Sanders to provide free college tuition ($800 billion or $47 billion per year), then fund President Barack Obama’s plan to get close to universal prekindergarten ($75 billion over a decade), forgive more than half the student debt in America ($1.4 trillion) cover Democratic leaders’ plan for boosting teacher pay and school funding ($100 billion), or come close to funding a $1 trillion infrastructure plan. According to an editorial for Investor’s Business Daily, moving the economy away from fossil fuels to 100 percent renewable energy will come “at a cost of about $5.2 trillion over 20 years” or $260 billion/Yr.
Total cost/yr: Medicare for all $3 trillion
Free College Tuition $47 billion
Forgive ½ student debt $82 billion
Renewable energy $260 billion
Infrastructure $59 billion
3 trillion 448 billion per year for the next near two decades (3.448 trillion/yr). The richest 1% earn a total of 1.7 trillion/yr.
Update. This blog was written several years ago, but is being updated in February of 2023. Just a few weeks before this was written, President Biden gave his State of the Union address. He talked about “getting the job finished” that he has started by bringing the United States’ national debt to a crushing $31 trillion. Nikki Haley, announced her Republican candidacy for President in the 2024 election and said that Big Guy Biden’s SOTU could be summarized in six words: “tax…..spend…..tax……spend…..tax…..spend!”
In 2016, this richest 0.9 percent earned about $1.7 trillion in taxable income and paid about $530 billion in taxes. These Americans would have to pay an additional $320 billion every year in taxes if the top tax rate went up to 70 percent, according to calculations based on IRS data. Mazur, a former Treasury official, noted this estimate was probably high because the wealthy would probably find ways to try to shelter themselves from higher taxation, such as by buying tax-exempt bonds. In other words, they would use every possible loophole (which is sensible and legal) to avoid paying any non-required tax.
But there is another way to avoid taxation, rather than just minimizing the legal obligation. As usually happens in socialism, the rich become aware that they will not be permitted to keep a generous share of what they produce, so they simply quit producing it, which saves them effort, stress, and time. They end up with the equity society then produces, which is what makes everyone equally poor in socialism. If we assume that we simply taxed away everything that the rich made (yes, if they pay everything they earn, that would presumably be “fair” according to AOC), they would still not nearly cover all the expenditures progressives can reimagine.
We conclude with an observation that is quite correct. It is that the rich pay more than their fair share of federal income taxes. Federal income tax data for 2017 reported by the IRS shows that the top 1 percent of income earners pay 39.5 percent of all federal income taxes, nearly twice the 20.6 percent share of national income they earn. The bottom 45% of U.S. income earners pay no taxes at all.
So far, the only concrete step Ocasio-Cortez describes to enact the Green New Deal is the formation of a House select committee to formulate specific goals. On the environmental side, these would include, among other things, expanding renewable-energy sources until they provide 100 percent of the nation’s power; building an energy-efficient “smart grid;” upgrading every residence and industrial building in the U.S. for energy efficiency, comfort, and safety; eliminating greenhouse-gas emissions for industry and agriculture; funding “massive” investments to draw down greenhouse-gas levels; and making the United States a leader in the use and export of green technology. After airlines are outlawed because of their carbon track, no one has yet estimated the cost of the fast rail bridge from California to Hawaii.