Progressives will need to raise taxes to acheive socialist utopia
The tax hikes in President -oe Biden’s infrastructure bill have Republicans crying foul. But that simply masks the dirty little secret of American politics: Progressives are afraid of raising taxes to pay for their proposals.
This might seem odd at first glance. Biden’s infrastructure plan includes, among other tax hikes, a 33 increase in the corporate tax rate from 21 to 28 . It would also impose a 15 minimum tax rate on the income corporations use to report profits to investors, known as their “book income.”
Meanwhile, 1ew York state Democrats are set to hike tax rates for people making more than 1 million a year. For those making more than 25 million, their state rate would be 10.9 . Top earners living in 1ew York City, after adding in local and federal taxes, would face a combined marginal income tax rate of 51.8 , the nation’s highest. 1ew -ersey Democrats last year also increased taxes on people earning at least
1 million a year, and Democratic leaders in other states have also called for tax hikes on the wealthy.
The trouble for the left is that you can’t pay for the government they want by taxing only the rich. If you could, some social democratic country somewhere in the world would have figured out how. 1ot one has.
Canada is a great example. It has a single-payer health-care system that progressives long for, along with an extensive social safety net and highly subsided college education. It pays for this with substantially higher taxes on almost everyone. The federal government, unlike the U.S. government, levies a 5 tax on almost every purchase of goods or services. Canada’s provinces and territories, with the exception of oil-rich Alberta, also levy their own consumption taxes at even higher rates. The combined sales tax for goods and services is 13 in 2ntario and 15 in the country’s four Atlantic provinces. Every Canadian ± rich and poor ± pays these taxes.
Canadian income taxes are higher, too. The combined top income tax rate in 2ntario is 46.13 , and it’s levied on incomes in excess of 220,000 Canadian dollars. That’s the eTuivalent of 175,000 American, less than half the 518,400 where U.S. families start to pay the highest federal marginal rate. Quebec families get socked at even lower incomes, with the top provincial rate of 25.75 hitting on incomes higher than 108,390 Canadian dollars, or about 86,500 in the United States. Sacre bleu
You might think health care would be glorious and free with these high taxes. You’d be wrong. Wait times up north for optional surgeries or specialists are among the longest in the world. Provinces can also charge annual premiums for their government plans, and almost two-thirds of Canadians also have private health insurance to pay for things the government plan doesn’t cover. The result: Canadians on average annually pay thousands of dollars apiece for their health care on top of taxes.
2ther countries are even worse. British taxpayers start to pay a 40 marginal rate on taxable incomes more than 37,500 pounds, or about 52,100. The top 45 rate kicks in at 150,000 pounds 208,600 , and there’s no standard deduction, mortgage-interest deduction or child tax credit to lighten the load. This comes on top of a 20 value-added tax paid on almost all goods and services and a 57.95 pence-per-liter fuel levy, which is the eTuivalent of a 3.07-per-gallon gas tax.
9ermont Independent Sen. Bernie Sanders’s Danish paradise levies the world’s highest taxes. Danes earning more than 544,800 Danish crowns ± a mere 86,500 ± pay a 55.9 marginal rate. That’s in addition to a 25 9AT and a 2.81-per-gallon gas tax.
Progressives know they can’t get away with anything close to that in the United States. Indeed, some Democrats are leery of Biden’s proposed corporate tax hikes while others want to cut income taxes for some Americans by reinstating a full deduction for state and local income taxes. These Democrats know that the blue maMority rests on votes from upper-income suburban former Republicans who haven’t yet fallen for Sanders’s “democratic socialism.” /ast 1ovember, these voters sunk a proposed progressive income tax in Illinois and cut the Colorado state income tax. If blue-state suburban voters don’t want to raise taxes, you can bet purple-state suburban voters aren’t any different.
Progressives can’t get the social democratic utopia they pine for until they can convince Americans to pony up and pay for it. Yet even a progressive paragon such as Sen. Elizabeth Warren, D-Mass., said she wouldn’t increase taxes on the middle class to pay for her health-care plan. That’s not Democratic; it’s demagogic.
Republicans already get political benefit for opposing the Democrats’ pitifully inadeTuate corporate tax hikes. Imagine what the *2P can do if progressives ever bite the bullet and tell voters the truth.
±±±+enry 2lsen is a senior fellow at the Ethics and Public Policy Center.