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Why 70 percent tax rates won’t work

Brian Riedl uses a National Review Online column to address U.S. Rep. Alexandria Ocasio-Cortez’s proposal for 70 percent top marginal tax rates.

Representative Alexandria Ocasio-Cortez’s call for a 70 percent income-tax rate to finance green-energy initiatives has energized the Left. Yet this is completely destructive proposal. A 70 percent tax bracket would raise very little (if any) revenue, while damaging the economy and sending income and jobs overseas.

While details of Ocasio-Cortez’s energy proposal are unavailable, former Green-party presidential candidate Jill Stein has proposed a “Green New Deal” costing between $700 billion and $1 trillion per year for public jobs and clean energy initiatives. That is roughly 4 percent of GDP.

And when assessing the needed tax revenues, a green-energy initiative costing $7–$10 trillion over the decade should be examined in the context of $42 trillion in additional Democratic-socialist proposals that include single-payer health care ($32 trillion), a federal jobs guarantee ($6.8 trillion), student-loan forgiveness ($1.4 trillion), free public college ($800 billion), infrastructure ($1 trillion), family leave ($270 billion), and Social Security expansion ($188 billion).

That 21 percent of GDP cost would double federal spending. And that does not even account for a baseline budget deficit rising to 7 percent of GDP over the decade — bringing the total budget gap to 28 percent of GDP.

Even if taxing the rich could finance a Green New Deal costing 4 percent of GDP … that would use up all the plausible upper-income tax hikes that could otherwise address the remaining baseline deficits and new liberal spending initiatives that total 24 percent of GDP (an annual budget shortfall of $5 trillion in today’s dollars). The middle class would have to pay that remaining tab.

Mitch Kokai / Senior Political Analyst

Mitch Kokai is senior political analyst for the John Locke Foundation. He joined JLF in December 2005 as director of communications. That followed more than four years as chie...

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