This post has been edited to correct an overestimation of taxes under Bernie’s Social Security tax plan. A detailed log of changes is available on Github (04/21/2016)
There are a lot of misleading and false rumors being spread about democratic presidential candidate Senator Bernie Sanders’s tax plans (TODO: link to Mom’s Facebook page for examples). With the recent release of his final tax plan, Medicare for All, Bernie has now described in detail precisely how each of his programs would be paid for. With this information, I have completed a comprehensive analysis of the impact that Bernie’s plans would have in the incomes of American families. The result is that more than 70% of families would save significant amounts of money under Bernie’s plans. The greatest savings would be for a family with an annual income of $34,000 or 140% of the Federal Poverty Level. This family would have $8,933 more in their pockets each year. The median family, with an income of $66,633, would save $7,729 per year.
For this chart and the figures quoted above, I have considered a family of four that files joint taxes and resides in a state that accepted the Obamacare Medicaid expansion. The dark line in the chart shows the current burden of taxes and healthcare based as a percentage of gross income. The light blue line shows what that total burden would be with all of Bernie’s tax plans in action. Green shaded areas indicate which income levels would save money under Bernie’s plans, and orange shaded areas indicate which incomes would pay more.
From left to right, increasing levels of income are shown. They are spaced out based on percentile rank, that is how many families are represented by each income level according to the 2014 U.S. Census. Information is limited regrading the incomes of wealthy families, so all that can be presented is that the top 4% of families have an average income of $402,000.
From bottom to top, the burden of taxes and healthcare increases. This is the portion of their total income that a family spends on federal taxes, healthcare premiums, and out-of-pocket healthcare expenditures like co-pays and deductibles. If a family receives money back in tax refunds from the Earned Income Tax Credit and Additional Child Tax Credit that exceeds their costs, then they will have a negative burden.
Families under the 25th percentile, which have a negative net burden due to tax credits and Medicaid, would see no changes under Bernie’s plans. Families with incomes from the 25th percentile level up to just over the 95th percentile would save money. The remaining families with incomes greater than $280,000, less than 5% of all families, would pay more. Additionally, the current tax system is mostly flat from the lower middle to upper classes, meaning we expect the same contributions as a proportion of income from relatively poor families as we do from those with plenty. Under Bernie’s tax plans, the tax system would be progressive, reducing the burden on those with the least.
When I started supporting Bernie Sanders for President, I fully expected to pay a little bit more to ensure that all of my neighbors were guaranteed access to healthcare and a decent standard of living. That would have been a good deal in my book. The fact that he can do all of that and more while saving money for the vast majority of Americans is a nice bonus, though.
Want to live in country with fairer taxes, an honest campaign finance system, and accessible healthcare for all? You can with these three weird tricks that plutocrats hate:
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What’s Included in the Calculations
The following current expenses and tax programs are included:
- Federal income tax
- Social security tax
- Medicare tax
- Average family healthcare premiums for employer sponsored insurance
- Average family out of pocket healthcare expenditures for employer sponsored insurance or average Medicaid out of pocket expenditures
- IRS standard deductions
- IRS personal exemptions
- Earned Income Tax Credit
- Child Tax Credit
The following Bernie Sanders programs and tax plans are included:
- Rebuild America Act
- College for All
- Expand and Extend Social Security
- Youth Jobs Program
- Paid Family and Medical Leave
- Protect Pensions
- Renewable Energy and Clean Jobs Transition
- Medicare for All
Check under the Hood
The remainder of this post will details the sources and calculations used in my analysis. For rates that vary by year, the amount for 2015 was used. You can also view the full source code on GitHub.
Federal income tax
Social security tax
Calculation: Flat tax on first $118,500, no tax on remaining income
Changes under Bernie: No change for incomes up to $250,000. Any income over $250,000 is taxed at the same flat rate as the first $118,500.
Calculation: Simple marginal tax brackets.
Changes under Bernie: None.
Source: 2015 Milliman Medical Index
Calculation: Fixed amount set at national average for families of 4 with employer sponsored insurance (page 7 in the above report). Reduced to $0 for Medicaid-eligible.
Changes under Bernie: $0 healthcare premiums for all
healthcare Out-of-Pocket Expenses
Source: 2015 Milliman Medical Index, Center on Budget and Policy Priorities
Calculation: Fixed amount set at national average for families of 4 with employer sponsored insurance (page 7 in the above report). Fixed rate of 2.4% of income for Medicaid-eligible; based on most recent available data from 2002 and thus likely to be underestimated.
Changes under Bernie: $0 healthcare out-of-pocket for all
IRS standard deductions
Calculation: 2015 fixed amount for married filing jointly
Changes under Bernie: none
IRS personal exemptions
Calculation: Fixed amount per person in family with gradual phase out for incomes over $309,900
Changes under Bernie: none
Earned Income Tax Credit
Source: IRS, Federal Register via Cornell Law
Calculation: Complex phase-in based on earned income and phase-out based on adjusted gross income. 2015 max of $5,548. Refundable.
Changes under Bernie: none
Child Tax Credit
Calculation: Flat amount per child, phase-out for incomes over $110,000 (AGI), refundable up to 15% of earned income over $3,000.
Changes under Bernie: none
MEdicare for All Tax
New under Bernie: Flat rate of 2.2% on all income. An additional 6.2% payroll tax is also collected from employers, but this will be offset by savings to employers from no longer having to pay healthcare premiums, and employers will save money on most employees as a result.
Family and Medical Leave Tax
Source: Senator Gillibrand
New under Bernie: 0.2% tax on income up to $113,700
Income distributions are taken from the US Census tables for family incomes in 2014.
What’s Not Included
Many of Bernie’s plans are funded by closing tax loopholes used by wealthy individuals and corporations and taxing investment income more fairly like earned income. These don’t affect most families and are not included here. You can find the details on BernieSanders.com