Tuesday, January 12, 2016

Clinton offers plan to increase taxes on the super rich

But does it measure up to what Bernie Sanders and Elizabeth Warren would like to see done?

Judge for yourself. Greg Sargent (Washington Post/Plum Line) compares competing proposals (insofar as they have been described in any detail).

On the trail in Iowa moments ago, Hillary Clinton rolled out the first piece of her plan to hit the wealthy with higher taxes. This will ignite a debate about progressive taxation with the GOP candidates, whose plans would deliver large windfalls to top earners — but it may also jump-start an intra-Dem argument over taxes with Bernie Sanders, whose plan is likely to hit the wealthy with a more robust tax hike than Clinton’s will end up doing.

Clinton’s new proposal would impose a four percent “surcharge” on those who make more than $5 million per year, a Clinton aide says. The Clinton campaign estimates that this would hit two out of every 10,000 taxpayers, and raise over $150 billion over ten years.

Clinton’s new plan is designed to target the income of the wealthiest taxpayers in a way that gets around ... efforts to pay lower rates, according to Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center. To do this, it would impose a hike of four percentage points on whatever effective rate each of these top taxpayers currently pays.

“This is an attempt to say, ‘okay, if you have really high income, no matter what you’re paying now, we’re going to add four percentage points to it,'” Williams tells me. “It’s a blunt instrument. But it’s straightforward and simple.”

The Clinton proposal seems designed both to draw a contrast with the GOP candidates and to stake out a position in advance of a debate over progressive taxation with Bernie Sanders that will be joined once Sanders makes good on his vow to offer a plan to hit the wealthy with higher taxes. The GOP candidates have offered plans that contain some middle class tax relief but also deliver sizable windfalls to the rich. The Clinton plan — or what we know of it so far — would, by contrast, target the highest earners to pay more than they do now.

But all expectations are that Sanders’ plan will go farther in raising the top marginal tax rate paid by high earners. “I would say Clinton’s four percentage point surcharge is going to collect a lot less revenue from wealthy people than the kind of plan Sanders is talking about in broad brush terms,” Williams says.

... it’s plausible to surmise that Clinton may be looking for a middle ground on high end taxes ... — hitting the very wealthiest taxpayers with higher effective rates, but not going after the wealthy nearly as ambitiously or comprehensively as Sanders hopes to do with higher marginal rates on a much bigger pool of taxpayers.

So what does Clinton's plan do in the larger economic picture?

"In terms of solving budgetary problems, this is chump change,” Williams said. “But in terms of potentially funding a small to moderate sized program, it could have an effect.”

Scriber hopes our Democratic candidate for President, whoever he or she may be, will offer more remedy for America's economic inequality than "chump change."

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