Financial Focus: To Tax Or Not To Tax The Rich More. That Is The Question.

Anthony RivieccioFinancial Focus: Democratic Presidential proposals; What do you want to fund first?

by Anthony Rivieccio

Free College, Free Health Care, $2500 Child Care Credits, Infrastructure Funding, Reduce Government Spending!

It’s the silly season as presidential candidates rollout their economic plans to “Make America Great Again.” The GOP presidential candidates propose cutting taxes for the wealthiest Americans. While Democrats (Sanders, Clinton, et al.), are prepared to raise taxes on those same wealthy Americans.

Oh, woe upon the top 1 percent!

“Right now, the wealthy pay too little and the middle class pays too much,” said Hillary Rodham Clinton at last week’s Democratic debate in Las Vegas.

According to some Democrats, the top 1 percent of Americans have become very adept at figuring out ways to shift earnings that would normally be taxed at the top 39.6 percent rate on ordinary income.

Shifting earnings from one tax category to another is part of the reason that even the top 1 percent pay on average no more than a quarter of their income in federal individual income taxes — despite that top tax bracket of 39.6 percent, according to the Treasury Department.

The top 1 percent on average already pay roughly a third of their incomes to the federal government, according to a Treasury Department analysis that takes into account the entire menu of taxes — including income tax, payroll taxes that fund Medicare and Social Security, estate and gift taxes, excise and custom duties as well as investors’ share of corporate taxes.

So can the “Tax the Rich More” policy embraced by democratic socialist Bernie Sanders successfully raise large amounts of additional tax revenue by having the rich to pay a larger share of their income in taxes?

According to the Treasury Department, raising their total tax burden to, say 45 per cent would bring in an additional $276 billion. A fifty per cent tax would generate a whopping $400 billion in new revenue.

That would more than cover, for example, the estimated $47 billion cost of eliminating undergraduate tuition at all the country’s four-year public colleges and universities, as Senator Bernie Sanders has proposed, or Hillary Clinton’s cheaper plan for a debt-free college degree, with money left over to help fund universal pre kindergarten.

One hundred and nine billion dollars will be more than enough to pay for the first year of a new $2,500 child tax credit introduced by Senator Marco Rubio, Republican of Florida.

An additional $86 billion should be enough to cover the cost over eight years of repealing the so-called Cadillac Tax on high-cost health plans. Both Senator Sanders and Hillary Clinton have endorsed a repeal.

An additional $176 billion is roughly the amount that the Federal Highway Administration has estimated is needed each year to improve conditions significantly on major urban highways.

Alternatively, the revenue raised from taxing the wealthy more could be used to reduce federal government borrowing.

But wait, all that spending adds up to $418 billion! Do we need to raise more in taxes to fund more programs? The bigger question, however, is how much taxation is too much taxation? Because at some point, higher tax rates would discourage extra investment and greater earnings.

Which program would you fund first? The answer to this question will be in the hands the Democrat or Republican elected President in November 2016.

Anthony Rivieccio is the founder & the CEO of The Financial Advisors Group, celebrating their 18th year as a fee only financial planning firm specializing in solving one’s financial problems. Anthony, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News12 The Bronx, Bloomberg News Radio, Bronxnet Channel 67 TV, The Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News and The Bronx Chronicle.

For financial inquires or assistance, Anthony can be reached at (347) 575-5045 or

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