alexandria ocasio cortez progressive tax 70 millionaires

Alexandria Ocasio-Cortez wants to raise taxes on millionaires to fight climate change.

Getty Images

Representing New York's 14th congressional district, Congresswoman Alexandria Ocasio-Cortez's plan for a Green New Deal will be difficult to pay for, especially with current federal budget troubles. That's why she wants to significantly raise taxes, but only for those making more than $10 million per year.

"That doesn't mean all ten million dollars are taxed at an extremely high rate," she clarified to CNN's Anderson Cooper. "But it means that as you climb up this ladder, you should be contributing more."

The ladder that Ocasio-Cortez referred to, is the historically more-complicated income tax system, which taxed extremely high incomes at a much higher rate than they are now. Currently, all yearly income past the $500,000 mark is taxed at 37 percent; as recently as 1981, that figure was 70 percent.

"What you're talking about, big-picture, is a radical agenda compared to way politics is done right now," responded Anderson Cooper, who is paid $11 million a year and hails from the Vanderbilt family.

 

If Ocasio-Cortez's tax proposal became law, it would raise taxes on highest-income Americans to 70 percent — not even be the highest in American history. During Franklin Delano Roosevelt's administration, incomes higher than $2 million were taxed at a rate of 94 percent. It was only in the Reagan administration that the tax rate for very-high incomes fell to their current levels, and also marked the beginning of the rampant wealth inequality that continues today.

"If that's what radical means, call me a radical," Alexandria Ocasio-Cortez concluded.

Progressive tax rates and you: earning more doesn't mean keeping less

Right-wing outcry against Representative Ocasio-Cortez's proposed tax plan was loud and immediate, with Republican Congressman Steve Scalise attacking it on the basis of a at-best flawed understanding of how income taxes in America work.

Under the tax system advocated by Representative Ocasio-Cortez, the vast majority of Americans would not see their taxes increase: as of June 2018, the median income was $62,175. In fact, Ocasio-Cortez recommended keeping taxes for incomes under $75,000 at 10 or 15 percent.

This fact hasn't stopped organizations from attempting to overplay the effect this tax plan would have on New Yorkers, despite the fact that according to the Independent Budget Office, only one-tenth of one percent of New Yorkers make more than $5.2 million in a year.

Outlets such as Americans for Tax Reform have used misleading language in describing the plan, helping spread a common misconception that making enough money to reach a higher tax bracket will result in bringing home less than they would if they had stayed in a lower bracket. This simply is not true, the Center for Economic and Policy Research (CEPR) says.

"There is no [as in none, nada, not any] way that getting more money, and being pushed into a higher tax bracket will leave you wiht less money after taxes," CEPR senior economist Dean Baker writes.

Marginal, or progressive, tax rates apply only to the income above that threshold. According to Alexandria Ocasio-Cortez's plan, only money made in a year past the $10 million mark would be taxed at 70 percent, while the rest would be taxed at the same rate as before. For average Americans, this means that jumping from one tax bracket to the next would raise their tax bill by a small amount.

"You're the GOP Minority Whip," Ocasio-Cortez wrote on Twitter in response to Congressman Scalise. "How do you not know how marginal tax rates work?"

Loading...
Latest From ...