Despite the brouhaha over a viral clip of her dancing from college, freshman representative Alexandria Ocasio-Cortez has somehow forced news outlets to cover something substantive that they usually don’t—new policy ideas from Democrats.
In a 60 Minutes interview with Anderson Cooper, AOC was asked how she would pay for a Green New Deal. While she noted that the media rarely put on their accounting visors when confronted with other, shall we say, more “militaristic” programs, she also had a plan to pay for it.
70% tax rates on the very rich would help pay for the #GreenNewDeal to combat climate change, @AOC told Anderson Cooper: “Only radicals have changed this country.” https://t.co/MWDhzh4hTr pic.twitter.com/NTuaJ38cbC— 60 Minutes (@60Minutes) January 7, 2019
Taxing incomes over $10 million at a rate of “60 or 70%” could foot the bill for the initiative, she said.
For those on the left, it was a breath of fresh air and a break from the cramped ~35% vs. ~39.6% slap-fight Democrats and Republicans have been having over the top marginal rate for the past two decades.
For those on the right, it was all-out class warfare. Amateur GOP Twitter troll Mike Huckabee mischaracterized Ocasio-Cortez’s plan and wistfully yearned for the days (and Dems) of John F. Kennedy:
I'm just fine w/ Alexandria Ocasio-Cortez dancing; I'm NOT fine w/ her tax proposals. JFK wouldn't be either. There was a time when Dems weren't socialists. What happened to them? https://t.co/N72CHdh4IA— Gov. Mike Huckabee (@GovMikeHuckabee) January 4, 2019
The only problem with Huckabee bemoaning a 70% top marginal rate while pining for Kennedy? The top marginal rate during Kennedy’s presidency was… 70%. In fact, Kennedy CUT taxes to 70%, before that (during Eisenhower’s presidency AKA “the good old days”) the top marginal rate was a whopping 90%.
Still, Republicans insist that restoring the top marginal rate of “the good old days” would have devastating effects on the economy.
Here’s a graph showing the complete lack of relationship between what we tax the richest Americans and the wealth our economy produces:
Even so, “tax cuts for the wealthiest = good” has essentially become a religious belief for the GOP and they push their agenda with all the fervor of a fundamentalist preacher at a tent revival. It won’t surprise you to learn their talking points are entirely fact-free. Just check out Republican want-wit Steve Scalise:
Republicans: Let Americans keep more of their own hard-earned money— Steve Scalise (@SteveScalise) January 5, 2019
Democrats: Take away 70% of your income and give it to leftist fantasy programs https://t.co/NxJPSCqvrt
Here’s the thing, as AOC clearly explains in the interview no one would be taxed 70% on their entire income. Under her example, the 70% rate only kicks in on dollar $10,000,001. Every dollar before that one is taxed at a different and substantially lower rate. That’s how marginal tax rates for a progressive income tax work!
If you still can’t wrap your head around it, Twitter user Dianna Anderson has a helpful primer featuring Dwayne “The Tax Example” Johnson.
okay so a lot of (rich, white) folks are freaking out about what a 70% tax rate on the wealthy would look like and they’re scared about it and shit (even though it’s literally what rich baby boomers already dealt with).— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
SO LET’S DO THE MATH.
Post WWII, the tax rate peaked at 94% on annual income over $200,000 ($3mil in 2018 dollars). In the decades following, it dropped to a marginal tax rate of 70% of all income over 200k/annually (again, 2-3mil in today’s dollars, depending on year).— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
Here’s a thing a lot of folks don’t understand: we have a tax system in the US that only taxes money above the “bracket.”— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
So, say the cut off for a particular percentage is 250k and you made 254k last year. The entire thing wouldn’t be taxed at the higher rate. Just the 4k.
So this doesn’t mean that all rich people would suddenly have to give up 70% of their income. Thanks to the way tax brackets work, they would only be taxed at the rate for the money above the cut off. So it isn’t a 70% flat tax—which the GOP are depending on you misunderstanding.— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
I and other regular joes who don’t break six digits on our annual income would never be affected by this. It’s literally adding additional marginal tax rates at higher percents for the much higher income earners.— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
So say the Dems get their knickers untwisted do the bold thing and create a tax rate of 70% for all income above, say, $10 million.— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
(keep in mind, we had our largest periods of growth and economic stability when we taxed the rich like this).— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
So let’s say you’re Dwayne “The Rock” Johnson. You made $65 million last year. In ONE YEAR. So that 10mil cut off is gonna hit you. 70% off everything above 10mil. That leaves you with 16.5mil.— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
“Wow, that’s a big hit!” you think.
On paper, yeah! That’s a lot of money to just…give up in taxes!— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
But that still leaves the Rock with nearly $20mil (considering his 10mil is also taxed at a lower rate).
That’s $20 million in net pay for a year.— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
This is the Rock’s House, in Florida. He bought it in 2012 for $3.4 million dollars. He has, from my quick internet estimation, about $104k in property taxes yearly. pic.twitter.com/SbRT254E8y
He could buy that same home over and over every two months for a year and still have money left over to put a weight room in each property.— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
That’s with the money he has LEFTOVER after a 70% tax rate.
Put it another way:— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
The Rock would pay almost enough in taxes in a single year to completely solve Flint’s water crisis.
He could fund the Smithsonian’s annual facilities maintenance budget for 7.5 years.
And that’s the Rock. He’s the second highest paid actor in the country (or was, in 2017).— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
Imagine what would happen if we were able to tax ALLLLLLL billionaires, and people above 10mil/yearly at that rate.
We could fund hospitals. We could fund libraries. We could fix broken infrastructure. We could implement so many programs to ensure children don’t go hungry.— Dianna E. Anderson ?️? (@diannaeanderson) January 5, 2019
And yet, somehow, we don’t, because it’s important that The Rock be able to buy his own house 7x over annually. Somehow.
There you have it. Let’s hope that going forward the conversation centers around how high we should raise the top marginal rate and what we the people are going to get out of it. We can’t afford another four decades of dishonest tax policy and GOP gaslighting.