Alexandria Ocasio-Cortez is calling for a Green New Deal. Kamala Harris is calling for tax cuts that actually cut taxes for the middle class. Everyone wants to know how we’re going to pay for these things. I’ve been kicking some ideas around today in partial conversation with a friend.
A Green New Deal will probably require a graduated system. In general terms, Ocasio-Cortez suggests that some portion of the top wealth of the wealthiest people will be taxed at 60 or 70 percent. Maybe that seems unfair to you. What seems unfair to me is that the payroll taxes of middle class people provide more revenue to the federal government than do corporate taxes. Separately, the effective payroll tax rates of the wealthiest Americans are minuscule in comparison to most working Americans. The payroll tax is one of the most regressive taxes there is.
Higher rates at the very top, it seems to me, would help make everyone’s life better. Someone has to finance the saving of the planet, and unless the ultra-wealthy are banking on terraforming Mars in the next few decades, they have just as much of a vested interest a Green New Deal as the rest of us. And are we really supposed to believe that a high tax rate on the very top levels of the income of the wealthiest Americans is a burden?
And yet, people who oppose higher corporate taxes (which, honestly, shouldn’t be all that controversial given the true tax burden in this country) are going to frame this as Democrats coming after the paychecks of middle class people.
But an actual tax cut for the middle class? How about we eliminate the employee share of the payroll tax and replace it with an increase in corporate tax? Maybe reduce the payroll tax for small businesses under a certain threshold?
One of the biggest obstacles to any of these reforms will be the power of people who demand corporate profit has passive income. Sure, we need investors. But we lionize and exaggerate how brave their risks tend to be.