News & Politics

Where is Elizabeth Warren Going to Get $20 Trillion in New Taxes?

Where is Elizabeth Warren Going to Get $20 Trillion in New Taxes?
(AP Photo/Michael Dwyer)

Surrogates for Elizabeth Warren are fanning out across the media world trying to explain the unexplainable: how their candidate is going to pay for her gargantuan $52 trillion Medicare for All plan and not destroy the budget and not raise taxes on the middle class…

And not get laughed out of Washington.

The media is referring to the cost of the plan being $20 trillion over the next decade. This is hugely misleading. They are not including funds spent by the states and the federal government on healthcare for the next 10 years. But since it’s money already being spent, they feel they don’t have to mention it. Nevertheless, it will be money spent by Washington and is part of her plan. They ignore the real cost so the voting public is only mildly shocked instead of panicky.

For months, Warren’s opponents and a few curious media types have been wondering how she is going to pay for $20 trillion in new taxes in this nation-altering scheme. Philip Klein of the Washington Examiner prepared a helpful list.

Healthcare payroll tax: $8.8 trillion.

This is supposed to be levied on employers to pay for healthcare for everybody, but economists have long concluded that such taxes inevitably get passed on to workers, which would include the middle class.

Wealth taxes: $3.75 trillion.

Warren has spent much of her campaign campaigning on a surtax on those with over $50 million in wealth. As part of her healthcare proposal, she wants to charge billionaires an extra 6%.

Investment tax: $2 trillion.

This would make the top 1% of households pay a tax on investment gains each year, regardless of whether they actually realized those gains by selling those investments for a profit.

Foreign earnings tax/tax on foreign firms: $1.65 trillion.

This would raise taxes on American companies’ foreign profits and tax foreign companies based on their domestic sales.

Asset depreciation tax: $1.25 trillion.

This would make companies deduct the depreciation of investments as they depreciate, rather allowing them to do it all at once.

Repealing Trump’s tax cuts would supposedly net $1 trillion. A “real” corporate profits tax. A tax on financial transactions. A “big banks” tax. Not only does this pie-in-the-sky funding scheme rely on dubious — some would say, “dishonest” — number crunching, it self-evidently breaks her promise not to raise middle-class taxes.

Peter Suderman of Reason points out the fallacy that the new “healthcare payroll tax” wouldn’t sock it to the middle class.

Right now, Warren’s plan says, employers spend about $9 trillion a decade on health insurance coverage. Her plan aims to move the private spending onto the federal budget. Under her proposal, large employers who currently pay for health coverage would be required to pay a comparable amount (equivalent to 98 percent of what they pay now, adjusted for the number of workers they employ) in order to help finance Medicare for All.

Warren shies away from calling this a tax, and she even claims “we don’t need to raise taxes on the middle class by one penny to finance Medicare for All.” Instead, she refers to it as an employer Medicare contribution, under which companies “would send payments to the federal government for Medicare.”

“Medicare contribution” or “tax.” What’s the difference?

But there is a commonly accepted term for a plan that requires companies to send payments to the federal government in order to finance government programs. That word is tax. And that is essentially what this is—a nearly $9 trillion payroll tax (or, perhaps, a head tax with some small-business carve outs). It is thus hard to see this as anything other than a massive middle-class tax hike.

In addition, Warren is advancing the fantasy that $2.3 trillion can be recovered by better tax collection and fighting tax fraud. Tax policy expert Richard Rubin observed:

Warren and her team are relying on a compliant media and other allies to hide her tax hike. That $9 trillion payroll tax is not coming from the super-rich or the undeserving wealthy. It won’t bleed billionaires or stick it to the upper class. That “head tax” will fall squarely on the shoulders of the American worker. And Warren’s shameful dishonesty is more than political posturing. It’s an assault on the middle class.

In some ways, Warren’s plan amounts to a list of technically sophisticated magic asterisks. It is as much an attempt to obscure the economic and political feasibility of passing and implementing a single-payer health care plan as a good-faith attempt to describe what it would practically require.

Yet in another way, it reveals something about both Warren and the economic reality of single-payer: Despite running a campaign based on wonky academic credentials and detail-oriented policy chops, Warren has, until now, repeatedly refused to directly answer questions about precisely how she would finance Medicare for All and whether she would foist new taxes on the middle class. Turns out she didn’t dodge the question because the answer was complex or hard to explain. She dodged it because the answer was so simple it could be expressed in a single word: yes.

Donald Trump won’t have to convince very many people that electing Elizabeth Warren president would be a calamity for the country.

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