Why Ocasio-Cortez’s 70% ‘soak-the-rich’ tax may fail

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ewly minted Democratic New York Representative Alexandria Ocasio-Cortez recently proposed imposing a 70 percent income tax on the country’s highest earning citizens to pay for a new green energy plan – an idea that tax experts say doesn’t make much sense.

Ocasio-Cortez, the self-described Democratic socialist, suggested imposing the 70 percent rate on those with incomes in excess of $10 million during an interview on “60 Minutes” to pay for the so-called “Green New Deal” — which would be a massive investment in clean energy infrastructure, aiming to eliminate carbon emissions in a little more than a decade.

However, experts question the efficacy of such a tax during an era where countries have largely moved away from charging such high rates.

Grover Norquist, founder and president of conservative-leaning tax advocacy group Americans for Tax Reform, noted that a 70 percent rate would be the “highest in the world.”

“[It’s] higher than communist China, higher than everybody else,” he told FOX Business’ Stuart Varney during an interview on “Varney & Co.” “There’s nobody in Europe with a 70 percent individual rate.”

Another problem, according to an op-ed Opens a New Window. published by Nicole Kaeding, director of federal projects at the Tax Foundation, is that even when marginal rates reach 70 percent, effective tax rates are actually much lower. A 2017 research paper Opens a New Window. found that in the 1950s, when the top rate jumped to more than 90 percent, the highest-earning individuals were, in reality, still only paying about 42 percent.

Ocasio-Cortez’s own constituents would also feel the pain: In New York, the top combined tax rate would skyrocket to about 82.7 percent, according to an analysis from Americans for Tax Reform. – READ MORE

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