Bloomberg proposes tax plan to raise $5T for policies
Michael Bloomberg said Saturday he would raise taxes on the wealthy, increase the corporate tax rate, and curb tax-free inheritances of large estates, elements of a tax plan that he says would raise $5 trillion over a decade.
Tax rates on low-income and middle-class Americans set by the 2017 Republican tax law would remain the same.
Bloomberg’s plan serves to show how he’d pay for an array of proposed new spending initiatives, which so far top $3 trillion. But his campaign cautioned that the tax plan could still change as the former New York mayor rolls out even more policy plans in the near future.
The tax overhaul would also close loopholes that the rich can exploit, according to a summary of the plan, which would allow for more spending on education, job training, infrastructure and in other areas and fight income inequality, Bloomberg said.
“My tax plan will make the tax code more progressive,” Bloomberg said during a campaign event Saturday in Denver. “I’m a wealthy guy, and I didn’t need a tax cut.”
“Right now, I give nearly all of my company’s profits to charity,” Bloomberg said in a statement. “Under my plan, I’ll continue doing that — but I will also pay more in taxes to make sure all Americans have the same opportunities I did. That’s only right.”
Bloomberg is the founder and majority owner of Bloomberg, LP, the parent company of Bloomberg News.
Bloomberg’s plan touches many of the same themes that his Democratic competitors have embraced, including raising income taxes on the wealthy, taxing capital gains at the same rate as wages, increasing corporate tax rates, and bolstering the Internal Revenue Service’s ability to audit.
The 2020 presidential hopefuls and Democrats in Congress have seized on popular sentiment for increased taxes, particularly for the wealthy and corporations, after the 2017 Republican tax law failed to gain the public’s backing and partially contributed to Democrats winning the House majority in the 2018 midterms.
The Bloomberg campaign said it hasn’t finalized the details of his plan, including what the threshold would be for taxing estates, because it hasn’t yet designed all of Bloomberg’s policy proposals and tallied their costs.
Bloomberg has released more than 20 proposals covering health care, the economy, climate and other issues since joining the race on Nov. 24, but he hasn’t provided cost estimates in most cases. The estimates he did release exceed $3 trillion over 10 years, including spending $1.2 trillion over 10 years for infrastructure and $1.5 trillion for health care. But there are dozens of other policy elements in the plans released so far, with no price-tags attached.
The plan released on Saturday adopts several of the policy ideas that Bloomberg’s moderate competitors, including Joe Biden and Pete Buttigieg, have touted. It stops short of some of the more progressive ideas — such as a wealth tax or financial transaction tax — floated by Senators Elizabeth Warren and Bernie Sanders, who’ve proposed tens of trillions of dollars in tax increases to pay for universal health care.
Instead of a wealth tax, the Bloomberg campaign said it’s looking to increase taxes on the wealthy with a 5 percent surtax on all income — both wage and capital gain — above $5 million a year. The idea is a pared-back version of an idea getting consideration in Congress that would put a 10 percent surtax on income greater than $2 million. This type of plan is seen as a way to raise revenue from rich taxpayers without the political and legal problems associated with a wealth tax.
Bloomberg proposes reversing some of the central elements of the $1.5 trillion GOP tax law championed by President Donald Trump. He would raise the top individual tax rate to 39.6 percent from 37 percent, increase the corporate tax rate to 28 percent from 21 percent, and repeal a 20 percent deduction for so-called pass-through income from limited liability companies and partnerships. Bloomberg has said the corporate rate needed to be lowered in the 2017 measure for competitive reasons, but went too far.
The campaign said it’s planning to design a mechanism so that small businesses and low-income people wouldn’t be harmed by the elimination of the 20 percent write-off. The tax benefit helps companies ranging from small mom-and-pop businesses to large investment funds, so a full repeal of the 20 percent tax break would face some political opposition from both Republicans and Democrats.
‘Basis step up’
The plan also would also tax capital gains income for those earning more than $1 million at the same rate as wage income — 39.6 percent, according to the plan. The campaign didn’t specify what happens to those below the threshold, who now pay the current long-term capital gains rate of 23.8% on the proceeds selling stocks, bonds or real estate.
It would end so-called “basis step up” which allows heirs to avoid paying taxes on appreciated assets. The campaign said it would seek to prevent wealthy investors from deferring taxes on their capital-gains income, but the proposal didn’t specify how it would do that.
The plan also looks to restrict corporations’ ability to dodge taxes offshore and would apply diplomatic pressure to tax haven countries that help companies harbor profits. It will also call for lowering the threshold at which the estate tax applies, but hasn’t yet set that amount.
Bloomberg would ideally want a Democratically-controlled Congress to pass a tax bill if elected, but thinks there are elements of the plan that Republicans could support, the campaign said.
Bloomberg has also said that while he knows tax increases are unpopular, the public can be convinced they’re necessary to pay for needed public services. As New York mayor, Bloomberg increased property taxes by 18.5 percent in 2003, the largest hike in city history, to generate $837 million to plug budget deficits. Bloomberg said that while his poll numbers suffered as a result, he was re-elected in 2005.
“I probably had the worst polls any mayor in America has ever had, and then I came back and won going away because people said, ‘I didn’t like spending more money, but he needed it,”’ Bloomberg said in a Jan. 11 interview.