This week, Sen. Bernie Sanders upped the ante on free stuff the legion of Democratic presidential candidates are promising voters. In what he called a “revolutionary proposal,” Sanders says that if elected he would forgive “all student debt” — that’s $1.6 trillion worth — and end “the absurdity of sentencing an entire generation to a lifetime of debt for the ‘crime’ of getting a college education.”
It would be hard to devise a plan that would shower more benefits on the wealthy than this one.
Just 12% of college debt is owed by those in the bottom quarter of income earners, according to the Urban Institute. “In other words, education debt is disproportionately concentrated among the well off,” the report notes.
Sanders’ plan would relieve doctors, MBAs, and computer scientists of their student debt. These are people who are or soon will be making six-figure salaries. Keep in mind, too, that students who borrow money for college are investing in their own futures, since a college degree is a ticket to higher incomes.
Even the left-leaning Slate.com had to admit that “from a pure fairness perspective, this would be a pretty questionable use of federal tax dollars.”
But the same could be said of the panoply of free stuff today’s Democrats are promising voters — a list that includes free child care, free preschool, free college, free health care, free “universal basic income.”
The price tag of any one of these proposals is gargantuan. Sen. Elizabeth Warren’s own debt-forgiveness-free-college plan would run $1.25 trillion over a decade. Her free child care plan another $70 billion a year. Sen. Kamala Harris is pushing a housing tax credit for families making up to $125,000 that will cost $760 billion over a decade. Medicare for all would run more than $32 trillion.
And like Sander’s debt forgiveness plan, much of the benefits of these freebies will go to families who don’t need them.
These Democrats claim that they can pay for all this — and more — simply by taxing the rich.
But the reality is that, in exchange for these new freebies that benefit the relatively well off, it’s the lower-income families who will end up carrying much of the burden of their costs.
Don’t believe it? Just look at countries that have already gone (just part way) down the socialist road Democrats are proposing. The tax burden they impose on the middle class is enormous compared with the U.S.
Data from the Organization for Economic Cooperation and Development show that the average taxes for people who earn less than the national average are significantly higher in European nations than the U.S.
In all but three EU countries that are members of the OECD, the marginal tax rate is 40% on incomes above $37,000. In alleged socialist paradises Finland, Denmark, The Netherlands, Sweden and Belgium, the top tax rate — of more than 50% — kicks in for families earning less than twice the national average. The data also show that as the countries’ overall tax burden goes up, so does the amount paid by lower-income families.
And this is to say nothing of Europe’s often steep VAT tax on consumption, which hits lower-income families harder than the rich.
Working class families would pay in other ways for the Democrats’ “free stuff” agenda. Even if they could manage to target only the rich, massive tax hikes they propose would send the economy tumbling. And guess who gets hit hardest when that happens?
So, what we have here is a party that wants to dramatically expand government benefits in ways that will benefit upper-income families. And in order to finance it, they will have to raise taxes on working-class families.
We’ll take “trickle down” economics any day over this. We suspect most hard-working Americans would, too, once they realized how expensive free stuff can be.
— Written by John Merline
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