“Rather than working to identify the problems with our health care system, she’d rather raise taxes and throw more money at it,” Leah Vukmir, a Republican vying to challenge Sen. Tammy Baldwin (D-Wis.) in 2018, said in a statement. “We cannot afford $1.4 trillion in new spending when our national debt is already more than $20 trillion.”
On Wednesday afternoon, after the launch was over, Sanders’s Senate office released a white paper on possible ways to pay for the legislation. He has rejected public estimates of how much similar plans might cost and suggested no hard estimate for the new bill. But the “white paper,” a combination of possible tax hikes and possible savings, is as close as Sanders will currently get to satisfying the critics.
The six-page document assumes that “our federal government could save up to $500 billion per year” if most insurance was replaced by universal Medicare, waving away more than a third of the yearly cost expected by Republicans.
The taxes themselves would fall on both employers and employees. Sanders floats the idea of a 7.5 percent tax on employers — who would no longer be footing a bill for employee health care — with one workaround. “As workers shift into the new system, employers will be required to pay either 75 percent of what they are currently paying for health care costs for each of their employees who enroll in Medicare for All, or the 7.5 percent payroll tax, whichever is higher,” he writes.
Another tax, of 4 percent, would hit individuals, on the theory that they would end up saving money relative to the cost of premiums. “A typical family of four earning $50,000, after taking the standard deduction, would pay a 4 percent income-based premium to fund Medicare for All — just $844 a year — saving that family over $4,400 a year,” writes Sanders. Families below the poverty line would pay no net new tax.
The next big slice of funding: higher tax rates on the very wealthy. Income less than $250,000 would be taxed at current rates; income higher than that would be hit harder, on an upward sliding scale, ending at a 52 percent tax on income over $10 million. (The highest income tax rate has not cracked 50 percent since 1981, when President Ronald Reagan slashed the top rate from 70 percent to 50 percent. It is currently 39.6 percent.)
The wealthy would not be done paying after that. Sanders imagines a tax on financial institutions worth more than $50 billion, a one-time tax on offshore profits (an idea that is continually floated then sunk in tax reform negotiations), a higher estate tax (topping out at 55 percent), and a 1 percent wealth tax on the richest 0.1 percent of households.
How much of this do backers of the Sanders bill support? A few ideas have gained their attention before, like the tax on financial institutions. But since the 1980s, Democrats have hesitated to run on tax increases for anyone but the very wealthy. In a few conversations after the launch event, Sanders’s Democratic allies veered away from discussions of new taxes, emphasizing ideas that could expand health care without voter-worrying costs.
“It costs the government nothing to enable people to have Medicare as a public option,” said Sen. Jeff Merkley (D-Ore.), who in 2016 was the only Senate colleague to back Sanders’s presidential bid.