January 28, 2016
Over the past few months, Senator Bernie Sanders (I-VT) has released details of changes he would make to the federal tax code. His plan would increase marginal tax rates on all taxpayers, through higher individual income tax rates and two new payroll taxes. The plan includes several provisions aimed at high-income households: it would raise the top marginal income tax rate to 54.2 percent, tax capital gains and dividends as ordinary income, replace the alternative minimum tax with a new limit on itemized deductions, and expand the estate tax. In addition, the plan would create a new financial transactions tax and move the U.S. toward a worldwide tax system by ending the deferral of foreign-source business income.
Our analysis finds that the plan would increase federal revenues by $13.6 trillion over the next decade. The plan would also increase marginal tax rates on both labor and capital. As a result, the plan would reduce the size of gross domestic product (GDP) by 9.5 percent over the long term. This decrease in GDP would translate into an 18.6 percent smaller capital stock and 6.0 million fewer full-time equivalent jobs. After accounting for the economic effects of the tax changes, the plan would end up increasing federal tax revenues by $9.8 trillion over the next decade.
Details of the Plan
Individual Income Tax Changes
Read the full article at the Tax Foundation: Details and Analysis of Senator Bernie Sanders’s Tax Plan