Feel the "Burn"

The chances of Bernie Sanders winning the Democratic nomination seem to be slimming. Although Hillary will probably move on to represent the party in November, Sanders' campaign is sending an undeniable message to citizens, politicians, and corporations about the need to reform Wall Street and large corporations. A related portion of his campaign has become about updating the tax code and he strongly emphasizes targeting the 1%. Many people blame the Clintons' money and media influence for Bernie's perceived downfall, but perhaps much of the more realistic left were a bit "turned off" from the tax implications that seep into the average personal return even though they idealized many of his other proposals.

170 economists have endorsed Sanders' plan to reform Wall Street and bring about regulations that are similar to Glass-Steagall, separating investment and commercial banking and breaking up the 'too-big-to-fail' banks. They even claimed Clinton's proposals are too modest and leave room for serious risks. His plan also calls for a change in the outdated corporate tax structure, including the necessary elimination of many corporate tax loopholes.

With regards to personal taxes, the most outspoken Sanders supporters emphasize the increases being focused on the wealthy and 1%, which is true. His plan would make the top earners pay a much higher effective percentage, but the anxiety of many moderates is grounded considering the non-partisan Tax Foundation's report analyzing the effects of Sanders' proposals. Some of the key findings include:

·       Senator Sanders (I-VT) would enact a number of policies that would raise payroll taxes and individual income taxes, especially on high-income households.

·       A majority of the revenue raised by the Sanders plan would come from a new 6.2 percent employer-side payroll tax, a new 2.2 percent broad-based income tax, and the elimination of tax expenditures relating to healthcare.

·       According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly increase marginal tax rates and the cost of capital, which would lead to 9.5 percent lower GDP over the long term.

·       On a static basis, the plan would lead to 10.56 percent lower after-tax income for all taxpayers and 17.91 percent lower after-tax income for the top 1 percent. When accounting for reduced GDP, after-tax incomes of all taxpayers would fall by at least 12.84 percent.

Although the report doesn't mention the healthcare savings and benefits of increased public expenditures, hearing the plan would lead to 10.56% lower after-tax income for all taxpayers is scary. Tax plan includes another 6.2% payroll tax, which comes directly out of paychecks, along with the effects of a lower GDP in the future. This speaks to the extent in which Sanders led his campaign by coupling the popular corporate/1% policy adjustments with changes that are socialistic in nature, too much so for enough people to be convinced America needs this large transformation. If Sanders loses the nomination to Clinton, it will most likely be blamed on his straying too far on the spectrum and in effect, his perceived inability to bring parties to a beneficial compromise instead of initiating a political revolution.