Alexandria Ocasio-Cortez doesn't want 70% of your income
There's been a lot of talk about the proposal from Rep. Alexandria Ocasio-Cortez (D-N.Y.) proposal to raise tax rates as high as 70% on America's wealthiest citizens.
Why it matters: An American making $11 million per year filing as single would pay $4,365,687 in taxes under the U.S.' marginal tax code rather than $7,700,000, which would be paid if the tax rate were a flat 70%, as some have suggested. That's a difference of more than $3.3 million annually.
- The difference for someone making an additional $1 million of income ($11 million instead of $10 million) under Ocasio-Cortez's plan would be about $330,000 in taxes.
Be smart: Here's what she actually said during her interview with "60 Minutes" on Sunday:
"You know, you look at our tax rates back in the '60s and when you have a progressive tax rate system, your tax rate, you know, let's say, from zero to $75,000 may be 10% or 15%, etc ... But once you get to, like, the tippy tops, on your 10 millionth dollar, sometimes you see tax rates as high as 60 or 70 percent. That doesn't mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder you should be contributing more."
A full plan would presumably have new tax brackets, but since Ocasio-Cortez only provides a couple examples in her response, we'll work with the current tax plan, cap the current highest tax bracket of 37% at $500,001-$10,000,000 and add a presumed tax bracket starting at $10,000,001 that's taxed at 70%.
- Reality check: One could also assume that like in the 60s and 70s (and today), America's ultra rich would find ways to dodge much of that onerous tax bill should this highly improbable proposal ever become law.
- Bonus reality check: Ocasio-Cortez has been a member of Congress for less than a week so maybe we can dial back talking about her tax plans for a bit.