WASHINGTON — The Democratic primary race remains highly unpredictable as Nevada’s caucuses are held on Saturday, but there is one thing we already know for sure about the party’s next presidential nominee: She or he has big plans to tax the very rich.
Every leading candidate in the party’s 2020 field — from relative moderates like Joseph R. Biden Jr., Michael R. Bloomberg, Pete Buttigieg and Amy Klobuchar to liberals like Bernie Sanders and Elizabeth Warren — has proposed trillions of dollars in new taxes on businesses and wealthy Americans. In each case, and to wildly varying degrees, the money would fund new government spending in areas like health care, education, housing and climate change, and a range of other programs meant to help the poor and the middle class.
Democratic candidates have long campaigned on higher taxes for the rich, but this year’s set of plans represents a striking escalation from past party nominees. They are a product of what longtime Democratic policy hands describe as a confluence of inequality trends, grass-roots pressure, the severing of some candidates’ ties with the wealthy liberal donor class and a Democratic voter backlash against the 2017 tax cuts signed by President Trump, which delivered their largest benefits to corporations and high earners.
In a campaign where the leading candidates have sparred over electability and progressivity, the Democrats’ tax and spending plans provide one of the most vivid illustrations of how widely their ambitions for the size of government diverge — and how far their party has moved in the last four years toward taxing the small slice of Americans who reap the economy’s largest rewards.
The most modest of the leading Democrats’ proposals, Mr. Biden’s, would raise taxes by more than twice as much as Hillary Clinton proposed in 2016. Mr. Buttigieg and Ms. Klobuchar would raise them by twice as much as Mr. Biden. Ms. Warren would raise taxes by three times as much as Mr. Buttigieg and Ms. Klobuchar. Mr. Sanders has not yet detailed all his proposed tax increases, but to cover his full spending ambitions, he would need to raise even more revenue than Ms. Warren.
Even Mr. Bloomberg, a billionaire himself, would raise taxes on the rich and corporations by an estimated $5 trillion, which is about 50 percent more than Mr. Biden would.
“The ground has shifted for everybody,” said Neera Tanden, the president of the liberal Center for American Progress in Washington and a former top aide to Mrs. Clinton, the last Democratic presidential nominee. “People believe the taxes are too low on the very wealthy. That’s become a cornerstone belief.”
It is also, polls suggest, a popular belief for a populist era. Surveys find large majorities of voters, including a majority of Republicans, favor plans like the so-called wealth taxes proposed by Ms. Warren and Mr. Sanders, which would tax the very wealthy on the assets they hold, not just the income they earn. As a candidate, Mr. Trump tapped into those sentiments by sometimes promising to raise taxes on the rich, though his signature 2017 law cut them instead.
The Democrats’ plans this time leave little question that, if they were enacted, taxes would rise for millionaires and billionaires. Even some other high-earning taxpayers — those earning more than $250,000 a year in many cases, though the thresholds vary by candidate — would see significant tax increases. Most of the candidates would make those households pay additional payroll taxes, in order to fund an expansion of Social Security benefits. In some cases those households would see their income taxes rise, too.
In the 2020 race, Ms. Warren and Mr. Sanders have made a point of not courting millionaires and billionaires to help finance their campaigns. Instead of holding private fund-raisers with wealthy donors, both candidates are relying on small-dollar donations raised from a vast group of supporters. Some Democrats say that decision has emboldened those candidates to propose taxing the rich more heavily than past party nominees would have.
“We are in a very different place, where the kind of fund-raisers that every politician is used to doing are now flash points for criticism,” said Heather McGhee, a distinguished senior fellow at the liberal group Demos Action, who advised Mrs. Clinton in 2016 and has endorsed Ms. Warren this cycle. “And that’s a great thing. But it’s a huge change. And I think it has shifted the policy conversation.”
The Democratic candidates have put forward their plans to spend trillions of dollars on new social programs at a time when the federal budget deficit is expected to exceed $1 trillion this year — having risen sharply under Mr. Trump, in large part because of his tax cuts.
Studies by the Penn Wharton Budget Model at the University of Pennsylvania have found that the tax proposals from Mr. Biden, Mr. Sanders and Ms. Warren would most likely fall hundreds of billions — or even upward of $1 trillion — short of what the campaigns claim they will raise over the course of a decade.
Some economists question whether it is possible for Ms. Warren and Mr. Sanders, in particular, to raise the tens of trillions of dollars their spending programs would require largely through taxing corporations and the very rich. Those economists say it will be easier for the wealthy to avoid taxes, and harder for the government to assess and collect those taxes, than the candidates’ estimates suggest.
“We are living in a world where basically everything is unknown” about how much money it is possible to raise from the very wealthy, said Natasha Sarin, an economist and professor at the University of Pennsylvania’s law school, who has critiqued Ms. Warren and Mr. Sanders’s plans as being overly optimistic. “We don’t know how much wealth the top has. We have some guess about what kind of avoidance we’re going to see.”
“I just think it’s important to be somewhat humble in the face of all these unknowns,” she said.
In many areas, the leading candidates’ tax plans overlap or even mirror one another. They all would raise income taxes on high earners, raise taxes on capital income like the sale of stocks and bonds and raise the corporate income tax rate. Where they disagree is on which specific new taxes to pursue — and just how much money to attempt to raise.
Bernie Sanders: Biggest spender, some taxes T.B.D.
Mr. Sanders’s policy agenda is by far the most expensive of the leading candidates, though estimates vary. The cost of his policy plans on just a handful of topics — health care, higher education, housing and climate change — could exceed $50 trillion over 10 years. By contrast, the federal government is currently projected to spend roughly $60 trillion over the next decade.
A huge chunk of that spending would go toward “Medicare for all,” the single-payer health insurance system he has championed. A single-payer system would require $34 trillion in additional federal spending over a decade, according to the Urban Institute.
Mr. Sanders has declined to specify how he would pay for it, though he released a list of financing options last year, including a 4 percent “income-based premium” that employees would pay.
He has also proposed an annual tax on household wealth that would apply to married couples worth over $32 million, a proposal that would raise an estimated $4.35 trillion over a decade.
Mr. Sanders has made clear he would significantly increase income taxes on the wealthiest Americans. In his 2016 presidential campaign, he called for a 52 percent top marginal income tax rate. He would also expand the estate tax and increase Social Security taxes on high earners.
Elizabeth Warren: Much more than ‘two cents’ from the super rich
Ms. Warren’s signature “two cents” wealth tax proposal would kick in on net worth over $50 million and would raise an estimated $3.5 trillion over a decade. The tax would increase to six cents on the dollar for net worth over $1 billion.
Ms. Warren would raise taxes on wealthy people in several other ways. She wants to reverse Mr. Trump’s tax cuts for high earners, which lowered the top personal income tax rate to 37 percent, from 39.6 percent. She would also revamp the estate tax, and she would increase taxes on capital gains for the top 1 percent of households. In addition, she would increase Social Security payroll taxes on high earners and create a new Social Security tax on their investment income.
In addition to a Medicare for all program that would require an estimated $20.5 trillion in new federal spending over 10 years, Ms. Warren’s proposals include a sweeping set of new programs addressing areas like Social Security, climate change, higher education, K-12 schools and housing. Taken together, those proposals and her Medicare for all plan have an estimated 10-year price tag of more than $30 trillion.
As for the moderates: Smaller plans for new taxes, and far less spending
Several other leading Democratic candidates have smaller aspirations for taxing the rich. But they still want to do so.
Mr. Bloomberg offered plans this month to raise taxes on the rich and corporations by what his campaign estimated would be $5 trillion over 10 years. He would do so by raising taxes on capital gains, labor income, inherited wealth and other income streams, all limited to high-earning Americans. Under Mr. Bloomberg’s plan, the top income tax rate would be 39.6 percent, with an additional 5 percent surcharge for incomes above $5 million.
Mr. Buttigieg would also set the top income tax rate at 39.6 percent. He would increase Social Security taxes and capital gains taxation for high earners, and he would expand the estate tax.
The Buttigieg campaign says the new spending it has proposed — on areas like health care, climate change and child care — adds up to more than $7 trillion over a decade. His health care plan, which would create a public health insurance plan that people could buy into, would cost $1.5 trillion, according to his campaign.
Mr. Biden would also raise the top income tax rate to 39.6 percent. He would tax capital gains as ordinary income for taxpayers with over $1 million in income, and he would cap the value of tax breaks for high earners.
Three of Mr. Biden’s major plans — on climate, health care and higher education — add up to $3.2 trillion. By itself, his health care plan, which like Mr. Buttigieg’s would offer a government plan that consumers could buy into, has a price tag of $750 billion, according to the Biden team.
Ms. Klobuchar would also raise income taxes on high earners, and she would impose a top rate of 44.6 percent for those earning above $500,000. She would also increase Social Security taxes and capital gains taxes for high earners, and expand the estate tax.
Over all, she has proposed about $7 trillion in new taxes, with roughly $5 trillion coming from the rich and corporations, and the rest from a plan to tax carbon emissions.
Jim Tankersley reported from Washington, and Thomas Kaplan from Reno, Nev.