New York Democratic Rep. Alexandria Ocasio-Cortez told “60 Minutes” host Anderson Cooper her grand plan to fight global warming could be paid for with a “60 or 70 percent” top marginal tax rate.
Ocasio-Cortez’s call for nearly doubling top marginal tax rates made waves in the media, but raising taxes on the wealthy is likely only one of many taxes that would need to be levied to pay for the so-called “Green New Deal.”
A Green New Deal could end up being the largest expansion of government in decades, meaning Democrats who support the plan will need to think of other ways outside of taxing the wealthy to pay for it.
Indeed, a question-and-answer section of draft Green New Deal legislative text suggests “a combination of various taxation tools can be employed,” including “taxes on carbon and other emissions and progressive wealth taxes.”
“The Federal Reserve can extend credit to power these projects and investments, new public banks can be created (as in WWII),” reads the Green New Deal draft document.
Democrats have pitched carbon taxes in the past as a way to raise more government revenue while cutting emissions. Republicans and conservative groups overwhelmingly oppose such a tax on the grounds it would raise energy prices and put thousands out of work.
The Congressional Budget Office reported in December that a $25 per ton carbon tax would raise about $1 trillion in revenue over 10 years. That’s less than half the $2.3 trillion the conservative Heritage Foundation estimated it would cost to meet the Green New Deal’s main goal—a 100 percent renewable energy grid in 10 years.
But a green energy grid is only one part of the Green New Deal. The sweeping plan also includes:
(i) upgrading every residential and industrial building for state-of-the-art energy efficiency, comfort, and safety;
(ii) eliminating greenhouse gas emissions from the manufacturing, agricultural, and other industries, including by investing in local-scale agriculture in communities across the country;
(iii) eliminating greenhouse gas emissions from, repairing and improving transportation and other infrastructure, and upgrading water infrastructure to ensure universal access to clean water;
(iv) funding massive investment in the drawdown of greenhouse gases;
(v) making ‘green’ technology, industry, expertise, products, and services a major export of the United States, with the aim of becoming the undisputed international leader in helping other countries transition to completely greenhouse gas neutral economies and bringing about a global Green New Deal.
Completely overhauling American manufacturing, transportation, and industry will likely cost much more than The Heritage Foundation’s estimate for just greening the grid.
But that’s not all—Ocasio-Cortez’s plan also includes sweeping social welfare programs, including universal health care and a “just transition” for minority communities. The draft Green New Deal text reads:
(i) include additional measures such as basic income programs, universal health care programs, and any others as the select committee may deem appropriate to promote economic security, labor market flexibility, and entrepreneurism.
Increasing taxes on wealthy Americans is another way Ocasio-Cortez believes she can pay for a Green New Deal. She suggested a top marginal rate as high as 70 percent during her Sunday night interview.
“Your tax rate, you know, let’s say, from zero to $75,000 may be 10 percent or 15 percent, et cetera,” Ocasio-Cortez told Cooper Sunday night.
“But once you get to, like, the tippy tops—on your 10 millionth dollar—sometimes you see tax rates as high as 60 or 70 percent,” Ocasio-Cortez said. “That doesn’t mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder you should be contributing more.”
However, raising the top marginal tax rate to 80 percent—along with a 55 percent upper-income bracket—would raise an estimated $293 billion based on a static revenue model, according to a 2014 Tax Foundation report.
Over 10 years, that’s nearly $3 trillion, but actual revenue will likely be much smaller “because of the negative feedback from the smaller and weaker economy,” according to the Tax Foundation.
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