Controversial new Democrat congresswoman, Alexandria Ocasio-Cortez, has stirred up a heated debate with her recent high-tax outburst. In one of her first interviews since being appointed, she proposed an ambitious spending plan to be paid for by tax rates of up to 70%. That caused a predictable uproar and Americans contemplated the idea of the government taking two-thirds of what they earn. But is that what the socialist firebrand was asking for — and if not, is what she really meant any better?
- Ocasio-Cortez wants a “Green New Deal” that would turn the USA into a socialist planned economy with zero carbon emissions and all energy being obtained from renewable sources. This would cost billions in government subsidies – and she wants to finance that through a huge program of tax increases.
- The flagship tax proposal is to increase the highest rates of income tax dramatically – she suggested a figure of 60-70%.
- This radical demand provoked a backlash from conservatives, with many taking to Twitter to voice their anger that a politician feels entitled to take so much of their money. One Republican, former congressman Scott Walker, compared it to being paid $10 for doing grandma’s chores and having your parents take $7 when you got home.
- Ocasio-Cortez hit back, claiming that Walker doesn’t understand marginal tax rates. That was a ridiculous thing to say, but many people don’t really grasp how tax rates work.
- The fact is that Ocasio-Cortez wasn’t suggesting the government takes 70% of everything anyone earns. Her proposal would only affect earnings above $10 million a year – anything below that would still be taxed at the usual rates.
- This is being used as an argument in favor of punitive taxes – that they only affect some of the income of the very highest earners. Proponents argue that this means the sort of tax Ocasio-Cortez is proposing is fair.
Many others disagree, though. It’s hard to argue that the government has a right to take 70% of anything someone earns, whether it’s their first dollar or their ten millionth. A high earner is still earning their money, no matter how much of it they have. What’s needed isn’t socialist politics of envy; it’s a simple, truly fair tax system that doesn’t drive people to create loopholes just to hang on to what’s rightfully theirs.