Americans making more than $5 million a year may have some new expenses if Hillary Clinton becomes president. The presidential candidate and former Secretary of State proposed a new surcharge of 4 percent on a tiny sliver of the wealthiest citizens, while promising never to raise taxes on the middle class.
Meanwhile, polls indicate a big surge for Bernie Sanders, Clinton’s rival for the Democratic nomination, putting the two candidates neck-and-neck for the primary votes in Iowa and New Hampshire.
Clinton is calling the new four-point tax a surcharge that would be applied after income and other taxes for people making over $5 million a year, which means the top.02 percent of the population. According to the Wall Street Journal, the surcharge would essentially create a new tax bracket that goes beyond the current 39.6 percent top income-tax rate for the super-rich.
Hillary Clinton’s surcharge would also affect capital gains earnings. The 15 percent maximum tax on qualified dividends and long-term capital gains has long been a contentious political issue. It was originally introduced by President George W. Bush, but President Obama made the controversially low tax a permanent part of the tax code, but created a 20 percent bracket for the wealthiest in 2013.
Clinton’s plan would put another four points on that rate. When Hillary announced the new tax idea, she called it a “fair share.”
“I want to go further and impose what I call a fair share surcharge on multi-millionaires because right now, we’re behind and we need to get the wealthy and the corporations to pay for their fair share, so I can keep my promise, which is I will not raise taxes on the middle class.”
Reuters reports the proposal is an extension of Hillary Clinton’s campaign promise last month to build on the “Buffet Rule,” which would establish a minimum 30 percent rate for those making more than $2 million a year. Warren Buffet, the famous billionaire investor, has advocated for a more progressive tax code that would bring his rates above middle-class workers.
In 2011, he wrote an op-ed in the New York Times, explaining that he has the lowest tax rate in his office.
“Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”
Even after tax increases in 2013, Buffet explained he’s still paying a lower rate than the rest of the office according to CNN Money, even though his tax rate increased by 8 or 9 points.
Hillary Clinton and other Democrats, including President Obama, have embraced Buffet’s idea, but Republicans have decried it as class warfare.
Within the Democrat voting base, it hits at an essential issue: income inequality. Candidate Bernie Sanders has made inequality a central theme in his campaign and has earned support partially as a result.
Hillary Clinton’s proposal may be a way to catch-up with Sanders on the issue. The former Secretary of State faces some major headwinds this month before the first primary votes, making it even more critical to capture votes from Sanders’ camp.
The FBI just announced they’ll be expanding its investigation into the former Secretary’s private email server according to Business Insider. The bureau is specifically looking into any overlap between State Department materials and emails related to the Clinton Foundation.
Meanwhile, Bernie Sanders is enjoying a surge in the polls. Real Clear Politics aggregated polls shows him down about 13 points nationally (up roughly 7 or 8 points from a few weeks ago); other polls show that in Iowa and New Hampshire, he’s in a statistical dead heat.
The political context surrounding Hillary Clinton’s tax proposal led Michael Short, Republican National Committee spokesman, to accuse her of making a last-second impersonation.
“Hillary Clinton is determined to do her best Bernie Sanders impression as she loses ground in the primary.”
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