Ocasio-Cortez's 70 percent tax would only cover small portion of Green New Deal
The Senate is expected to vote Tuesday on the Green New Deal (GND) — the radical new resolution introduced by Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Ed Markey, D-Mass., and embraced by many Democrats that would dramatically expand government and move the U.S. toward socialism.
While the $93 trillion proposal (according to one study) would reshape the nation’s energy and environmental policies, it would also lead to dramatic tax hikes on all Americans — not just the wealthy as supporters claim.
Taxing the rich will pay for a fraction of GND
Supporters of the Green New Deal have said they will pay for the program by taxing “the rich.” Most notably, Ocasio-Cortez has called for a 70 percent top tax rate.
However, this insane new marginal rate would only pay for a small portion of the Green New Deal. According to the Tax Foundation, a 70 percent tax rate would raise up to $190 billion between 2019 and 2028 if applied to ordinary income, and lose $63 billion over the same time period if also applied to capital gains revenue.
Similar proposals, such as Sen. Elizabeth Warren’s, D-Mass., wealth tax (which according to supporters would raise an estimated $2.7 trillion) and Sen. Brian Schatz’s, D-Hawaii, financial transactions tax (which would raise $800 billion according to proponents), would do little to meet the expansive costs of the Green New Deal.
For those not keeping track, these three tax hikes, according to the best-case scenario of supporters, would cover the cost of roughly 4 percent of the Green New Deal. It is also important to note these estimates are likely overstated. In practice, wealth taxes and financial transactions taxes have failed to raise the revenue that supporters have claimed when they have been implemented in other countries.
GND will increase taxes on Americans at every income level
Despite claims to the contrary, there is no way to pay for the Green New Deal solely by taxing the rich. The proposal will inevitably lead to higher taxes on every American family, individual and business.
Even the more modest “Medicare for All,” plan, which would cost roughly $32 trillion and is a component of the Green New Deal, increases taxes on middle class families and small businesses. Sen. Bernie Sanders, I-Vt., released $16 trillion worth of tax hike proposals as part of his Medicare for All plan, including a $3.5 trillion, 4 percent tax on all households and a $4 trillion, 7.5 percent payroll tax on businesses.
Similarly, Rep. Rosa DeLauro, D-Conn., and Rep. Jan Schakowsky, D-Ill, have proposed a plan that contains numerous tax hikes including full repeal of the GOP tax cuts (which would increase taxes on the typical family of four by over $2,000 and repeal the 20 percent small business deduction), repeal of tax-preferred HSAs (increasing taxes on over 25 million families), and a new tax on sugary drinks. This plan would also end private health insurance used by 173 million Americans, increasing taxes by another $3 trillion.
Combined these proposals represent a significant tax hike on the middle class, and they would pay for just a fraction of the total cost of the Green New Deal.
Alex Hendrie is director of tax policy at Americans for Tax Reform, a free market advocacy organization dedicated to lower taxes and limited government.