Paul Krugman Wants To Double Your Taxes
The Nobel laureate economist Paul Krugman has a column in Monday's New York Times endorsing "The People's Budget" from the Congressional Progressive Caucus. This is the "People's" budget in the same nonsensical sense that North Korea is the Democratic People's Republic of Korea; Professor Krugman himself acknowledges that it "has no chance of becoming law anytime soon."
Nonetheless, I was curious to see what Professor Krugman was so effusive about, so I clicked through to the summary. Highlights: Dividends and capital gains would be taxed as ordinary income rather than at the current 15% rate. Ordinary income would be taxed according to the Schakowsky millionaire tax rates, which are also backed by Rep. Jerrold Nadler of New York, quite a few of whose constituents would be affected. Those rates are:
This would apply to joint filers, so a couple earning $500,000 each now taxed at 35% would see their tax rate increase to 45%, and any capital gains or dividends that had been taxed at 20% would now be subject to the same 45% rate.
But that's just the start; the budget would also raise the taxable maximum subject to the Social Security tax to 90% of earnings on the employee side and 100% on the employer side. The budget claims that recipients would get some of this back in the form of increased benefits, but it still amount to essentially a 12.4% payroll tax on top of the 45% income tax. Add the 2.9% Medicare tax, which is already un-capped, and the tax rate hits 15.3% on top of the 45%, for a total of 60.3%. If you live in California or New York, get ready for 10% or so in state and local income taxes on top of that — the government is taking up to 70% of what you earn.
And if you have anything left at the end, Professor Krugman and the congressional "progressives" want that, too. Their budget includes an estate tax plan put forth by Senator Bernard Sanders of Vermont, a self-described socialist, who would impose a 45% rate on the taxable portion of estates up to $50 million, a 55% rate on the portion of estates up to $500 million, and a 65% rate on the portion of estates worth over $500 million. In other words, the government first taxes 70% of what you earn, and then taxes 55% of what you have left.
Which members of Congress support this plan? Well, the members of the Congressional Progressive Caucus are quite a group. A vice chair is Chellie Pingree of Maine, who attracted attention here during the election for jetting to the Virgin Islands with a money manager she described as her fiance, Donald Sussman, who has used the tax breaks available that minimize federal taxes for companies based in the U.S. Virgin Islands. Other luminaries in the caucus include Barney Frank of Massachusetts, Mr. Nadler, Charles Rangel, and Carolyn Maloney of New York, and Henry Waxman of California.
Anyway, it's something that Mr. Frank, who represents Newton and Wellesley, Massachusetts, and Ms. Maloney, who represents Manhattan's Upper East Side, Mr. Nadler, who represents Manhattan's Upper West Side, and Mr. Waxman, who represents Beverly Hills, would be part of a caucus putting forth a budget that would tax quite a few of their constituents at 70%, then take 45% or 55% of what they have left.
Reader comments on this item
Comment on this item
Subscribe to the Mailing List