Report: Medicare for All will raise taxes on the middle class (Elizabeth Warren hardest hit)

Do you hear that dull thud sound? That’s the sound of Elizabeth Warren beating her head against reality. Unlike Bernie Sanders, Warren hasn’t been willing to admit that taxes will have to go up to pay for Medicare for All. All she’ll say is that “for middle-class families, for hard-working people costs are going to go down.” Warren wants us to imagine is a system in which taxes go way up on top earners but people in the middle are better off.

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Monday the Committee for a Responsible Federal Budget released a new estimate of what it would take to raise the estimated $3 trillion per year to pay for M4A. They conclude there are various ways to get there:

In this preliminary analysis, we estimate the cost could be covered with a 32 percent payroll tax, a 25 percent income surtax, a 42 percent value-added tax, or a public premium averaging $7,500 per capita or more than $12,000 per individual who wouldn’t otherwise be enrolled in Medicare,  Medicaid, or CHIP. Medicare for All could also be paid for by more than doubling individual and corporate income tax rates, reducing federal spending by 80 percent, or increasing the national debt by 108 percent of GDP.

What can’t be done, according to CRFB, is to pay for M4A by only raising rates on top earners.

There is not enough annual income available among higher earners to finance the full cost of Medicare for All. On a static basis, even increasing the top two income tax rates (applying to individuals making over $204,000 per year and couples making over $408,000 per year) to 100 percent would not raise $30 trillion over a decade. In reality, a tax increase that large would actually lose revenue because it would institute marginal tax rates above 100 percent when other taxes are incorporated – effectively requiring people to pay rather than be paid to work, earn business income, or sell capital assets. We previously found that an extremely aggressive package of tax hikes on high earners, corporations, and the financial sector might cover one-third of the $30 trillion cost of Medicare for All.

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The group published this graph showing some of the options with the word “Impossible” in the space for “Tax High Earners Only.”

All of this would still be acceptable to a lot of people on the left so long as the new taxes were offset by a cut in premiums and co-pays. That’s essentially the promise that Warren has made. Yes, your taxes may go up but your “costs” will go down.

But as I pointed out last week, at least one expert who looked at it, Kenneth Thorpe of Emory, concluded that for most Americans (71%) taxes would go up more than their current premiums and co-pays. In other words, their costs would go up, not down.

Here’s a Washington Post supercut of Warren banging her head against the inevitable reality of tax increases on the middle-class:

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