New York City Mayor and Democrat presidential candidate Bill de Blasio has released his “Fair Share Tax Plan.” If implemented, de Blasio’s plan would raise taxes on millions of Americans and devastate the U.S. economy.
Based on estimates provided by the de Blasio campaign, this plan would increase taxes by over $10 trillion over the next decade.
However, it would only cover a portion of the cost of new spending that de Blasio supports.
For instance, the Green New Deal would cost $93 trillion to implement, a tenth of the cost of the revenue raised from the de Blasio’s tax plan.
This tax hike plan would barely dent the $40 trillion price tag to implement the Medicare for All socialized healthcare plan that de Blasio supports.
While de Blasio might pay lip service to the idea of making the rich “pay their fair share,” this plan shows that there is no way to fully pay for far-left spending priorities without hiking taxes on the middle class.
Dismantling the Trump Tax Cuts
De Blasio plans to dismantle most of President Trump’s signature legislative achievement, the Tax Cuts and Jobs Act (TCJA). De Blasio would:
- Raise the current top marginal tax bracket from 37 percent to 60 percent. This would create a total top tax rate of approximately 73 percent for de Blasio’s New York constituents.
- Treat capital gains as ordinary income, stifling investment and throttling economic productivity. This capital gains tax hike would make the top capital gains rate in de Blasio’s NYC 76.5 percent:
- De Blasio top capital gains tax rate: 60 percent
- NY/NYC combined top capital gains rate: 12.7 percent
- Obamacare capital gains tax: 3.8 percent
- TOTAL: 76.5 percent
- Subject derivatives to mark to market treatment, which would force a balance sheet to value an asset at its current market price instead of at book value.
- Expanding the Alternative Minimum Tax. The TCJA raised the exemption threshold for the AMT to $1 million for families and $500,000 for individuals, which still affects approximately 200,000 families and individuals a year. De Blasio would lower the threshold back to pre-TCJA levels, which would cause approximately 5 million families to resume paying the tax.
- Repeal the 20 percent passthrough income deduction mainly used by small businesses.
Taxing American Businesses
De Blasio would impose a number of tax increases on American businesses, which would harm investment, job creation and the expansion of the economy due to the Trump tax cuts.
De Blasio proposes raising the corporate rate to the pre-TCJA rate of 35 percent, which would give the U.S. an effective 41 percent corporate tax when combined with the average state corporate tax rate of 6 percent.
The de Blasio corporate tax increase would give the U.S. a much higher rate than the United Kingdom (19 percent), China (25 percent), Canada (26.8 percent), and Ireland (12.5 percent). It would impose a tax rate higher than the current combined corporate rate across the 36 member Organisation for Economic Development and Cooperation (OECD), which is currently 23.7 percent. An increase in the corporate tax rate would directly raise the cost of utility bills in all 50 states.
The de Blasio plan would also:
- Restore a “Corporate Alternative Minimum Tax” that would prevent businesses from using lawful deductions and credits upheld by bipartisan majorities in Congress
- Subject U.S. businesses to double taxation on income earned at home and abroad. Most countries have a territorial tax system, which would put the U.S. at a competitive disadvantage on the world stage.
- Impose a 0.2 percent financial transactions tax on stock, bond, and derivative trades. As ATR has written, this type of tax would harm economic growth and fail to raise any significant revenue.
- Impose a 0.15 percent tax on banks
Massive New Wealth Tax
De Blasio openly claims that he has the “most aggressive tax on extreme wealth of any candidate in the race.” His proposal:
- Imposes a 1 percent tax on households with wealth between $10 million and $25 million
- Imposes a 2 percent tax on households with wealth between $25 million and $100 million
- Imposes a 3 percent tax on households with wealth $100 million and above
De Blasio would also empower IRS agents to keep a list of all household assets.
This tax would subject Americans to unfair double taxation as Americans already pay taxes on income and capital gains, not to mention the 40 percent death tax on estates.
Contrary to de Blasio’s claim, a wealth tax would also fail to generate any significant revenue. A recent study shows that a wealth tax levied on assets above $11 million would only generate $146 billion in revenue, well short of what de Blasio would need to raise $3 trillion over a decade.
A wealth tax has also failed everywhere it has been tried. In France, a wealth tax imposed on assets over 1.3 million euros led to taxpayers fleeing the country. In 2016 alone, 12,000 millionaires left France, the highest outflow in the world. Wealth taxes have also been repealed in Sweden, Denmark, The Netherlands, Austria, Finland, Germany, Iceland, Luxembourg, Ireland, and Italy.