Bernie Sanders on Economic Inequality
The main goal of Bernie Sanders’ decades-long career in politics has been to address the root causes of economic inequality because, as he has stated, “The middle class of this country, over the last forty years, has been disappearing.”
In order to address this, Bernie advocates policies that get at the root causes of these inequities. He calls for expanding the social safety net, creating more well-paying jobs, and reforming systems that perpetuate inequality such as our broken criminal justice system.
The other side of the coin is that the super-rich and multinational corporations have not been paying their fair share in taxes. Bernie proposes removing tax loopholes and tax breaks that only benefit the rich and multinational corporations, as well as raising the rates for the wealthiest Americans. With a tax system reformed in these ways, the financial burden for expanded social safety net programs would be placed on those with extraordinary means.
According to Bernie, the main steps to achieving economic justice are:
Bernie thinks wealth and income inequality is so important, he made this video to lay out all the major points regarding the dwindling middle class, the state of the wealth and income gaps today, and lays out how we might build a more equitable economy for all.
Acknowledging Disparity of Wealth & Opportunity in America
The first step is to acknowledge that America has a problem. A structural economic inequality problem.
Does this have something to do with the 99% thing?
Absolutely. Today, the United States sees vast inequalities in both income (what we get paid) and wealth (everything we own). While some inequality is expected in any economy — and is perhaps even healthy — the U.S. today has inequalities allowing those at the top to amass (and keep) huge estates, while 22 percent of children live below the poverty line. Adults can work 40 hours a week and still not make enough to feed their families, while corporate executives in many of those same companies make much, much more.
Bernie believes this is unjust. In his own words:
“Ninety-nine percent of all new income generated today goes to the top 1 percent. The top one-tenth of 1 percent owns as much as wealth as the bottom 90 percent. Does anybody think that that is the kind of economy this country should have? Do we think it’s moral?”
This 2014 infographic shows the state of wealth distribution in the U.S.—
The chart above shows us just how strange our wealth distribution is. Wealth is someone’s combined assets: money, property, cars, stocks, etc. We see that the bottom 90 percent control less than one fourth of the wealth. The top 0.1 percent controls 21.5 percent, which is over one fifth. The amount controlled by the top 0.1 percent (the top one-tenth of one percent) is the largest it has been in over a century. Even higher than it was in the “Roaring Twenties”.
But what about income? Is that more balanced?
It isn’t quite as bad — but it’s still pretty bad. The following infographic shows the average income for the same groups of the U.S.:
The bottom 90 percent make $29,840 on average, but other reports based on the U.S. Census show that 40 percent of individuals make less than $20,000 annually, and 30 percent of families live on less than $40,000 a year. Learn more about where Bernie stands on issues affecting working Americans at the Working People page.
Fixing the Tax Code for Citizens, Corporations & Banks
Currently the super-rich and the largest corporations in America don’t pay their fair share of taxes, which means there’s not enough funding for programs that will alleviate systemic inequalities. The tax code needs to be reformed to enable us to break out of this vicious cycle and enable more people to have economic opportunities and build an even stronger and more equitable economy.
“If you have seen a massive transfer of wealth from the middle class to the top one-tenth of 1 percent, you know what, we’ve got to transfer that back if we’re going to have a vibrant middle class. And you do that in a lot of ways. Certainly one way is tax policy.” —Bernie Sanders
How would that tax policy work?
Bernie has many ideas, but here are some major planks of his plan for more equitable taxation:
- Progressive income taxes on the richest Americans.
- Fixing the estate tax so mega-rich families pay their fair share.
- Taxing corporations more fairly, including addressing tax havens.
- Taxing Wall Street speculation.
Who are the “richest Americans”?
These are the Americans who qualify for the top income tax bracket. Right now, the top tax bracket begins with money made beyond $400,000, and any additional money is taxed at 39.6 percent.
Does this mean these individuals pay 39.6 percent of their entire income in taxes?
Not at all. It means that money earned beyond $400,000 is taxed at 39.6 percent. The first $400,000 they make is taxed at the lower tax bracket rates.
This is actually how all tax brackets work in a progressive tax system.
I heard Bernie wants to raise the top tax bracket to 90 percent. That seems too high.
That’s actually not true. Bernie has never said he wants to do that. He has recently said that he is “working right now on a comprehensive tax package, which I suspect will, for the top marginal rates, go over 50 percent.”
But has it ever been that high?
Actually, yes. The top tax rate was over 90 percent from 1944 until 1964, including while Republican Dwight D. Eisenhower was president. This article in Business Insider shows just how low the 39.6 percent tax is compared to historical tax rates.
I’ve heard something about ‘capital gains’ and ‘dividends’… Is that related to this?
Yes. Capital gains and dividends are sources of income almost exclusively made by the wealthiest Americans. Capital gains are profits made through the sale of assets (usually stocks, business shares, land or collectible art). Dividends are shares of profit paid to stockholders of profitable stocks. While historically these were taxed at similar rates to normal income, since the 1970’s the tax rates have been lowered dramatically.
Why does this matter?
According to the Tax Policy Center, “the benefits of low tax rates on capital gains accrue disproportionately to the wealthy. In 2013, an estimated 94 percent of the tax benefit of low rates on capital gains will go to taxpayers with cash incomes over $200,000, and three-fourths of the benefits will accrue to millionaires.”
How much revenue can raising taxes on dividends and capital gains yield?
Bernie estimates that it will raise more than $500 billion over ten years. According to Citizens for Tax Justice, Bernie is being conservative in his estimate. They calculate that taxing capital gains at normal income tax rates would raise at least $613 billion over ten years. On top of that, they calculate that taxing corporate dividends as normal income would raise an additional $231 billion over ten years.
Wow. So what other ways can we address inequality?
For one, reforming the estate tax.
OK, what’s the estate tax?
The estate tax is a tax on the estate of someone after they pass away.
What does Bernie think is wrong with it?
While for many years this tax unfairly affected the estates and farms of many working- and middle-class Americans, it has been significantly changed to only affect large estates, worth several millions of dollars. The problem is that the rate has been lowered and the cap raised to such an extent that it has amounted to a huge tax break for the super-rich.
OK, so what is Bernie’s answer to reforming the estate tax?
Bernie has proposed lowering the bar on estate taxes so that individuals who own estates worth more than $3.5 million and couples who own estates worth more than $7 million will be taxed (at the moment the bar is set at $5.4 million and $11 million, respectively). This bill also increases the amount of tax on these estates, and closes loopholes used to avoid paying these taxes.
Shouldn’t people be able to pass on money to their children?
They should — but how much should they be taxed in doing so, and what are the effects? First off, even with Bernie’s proposed new estate tax, 99.75 percent of Americans would not pay any more in estate taxes than they do today. Second, these taxes are large, but for estates this large, they’ll hardly be bankrupting heirs.
In Bernie’s view, estate taxes are fair — and necessary — to prevent what former Labor Secretary Robert Reich calls, “an aristocracy of wealth populated by heirs who don’t have to work for a living yet have great influence over how the nation’s productive assets are deployed.”
Both Bernie and Secretary Reich believe that if the richest families accrue massive fortunes over time, they will control more and more of the economy — even if they aren’t working. This is unfair, especially in a country with so much work to do.
If you have 3 minutes, you should really watch this video from 2005, where Bernie railed against fellow lawmakers who were debating repealing the estate tax. The “I’m listening! I don’t hear an answer!” part is as good as C-SPAN gets:
What about corporate taxes and regulation?
Bernie has spoken out about corporations paying far too little in taxes, and even receiving benefits from the IRS. This is not very surprising. Corporations should pay their fair share in taxes. Not only are particular corporations not paying much in taxes, but the contributions of corporations to our tax revenue is at a historical low, as shown in this Politifact analysis of Bernie’s policy proposals.
How do companies avoid paying taxes?
The short answer is that companies claim that their profits are generated not by their headquarters or their facilities in the United States, but by a subsidiary in a locale with low corporate tax rates such as Bermuda or the Cayman Islands. Longer answers are available at the Corporate Regulation and Financial Regulation issue pages.
Why should we care?
It’s expensive! There is an estimated $2.1 trillion in profits held in tax havens, which studies estimate amounts to $90 billion of lost tax revenue. In 2008, a U.S. Senate investigation put the figure at $100 billion. That’s roughly what our federal government spends on transportation each year! It’s also tremendously unfair to society. These companies have built themselves up on an infrastructure and educational system provided by the government, and are now stashing their profits overseas to avoid repaying what they owe in return.
What is Bernie’s position on corporate “tax dodging”?
He feels that this is essentially legalized tax fraud, where companies abuse the concept of corporate residency to take advantage of U.S. benefits without paying their fair share in return. Many of them even end up being owed money by the IRS after filing their U.S. returns, effectively taking a direct subsidy in return for hiding their money and cutting jobs in the U.S.
What does Bernie suggest we do about it?
Bernie sponsored the Corporate Tax Dodging Prevention Act and co-sponsored the Stop Corporate Inversions Act of 2015. You can learn more at the Corporate Regulation issue page. And you can learn how Bernie’s progressive taxation policies could help balance our budget at the Federal Budget issue page.
What about tax subsidies to profitable corporations?
“The American people are asking how can it be that at a time when so many in Congress are calling for savage cuts to Medicare, Medicaid, and Social Security, and when they tell us we can’t renew key incentives for solar and wind and other sustainable technologies, that we can somehow afford to continue to pumping tens of billions in taxpayer dollars into hugely profitable fossil fuel corporations.”
Are we really giving away that much taxpayer money to fossil fuel companies?
Yes. If the current tax system remains unchanged, we’ll spend over $113 billion over the next ten years. See this extensive fact sheet for details.
What has Bernie tried to do about it?
Bernie introduced the End Polluter Welfare Act in 2012, and then re-introduced it in 2013 and 2015.
OK, and what about banks? Didn’t they contribute to our last economic meltdown in 2008?
Good question. Stock markets are intended to be a place where a company can go exchange ownership in return for working capital. But increasingly, the markets are used as a place to gain short term profits by quickly trading stocks with tiny price differences and using other high-risk trading methods to make a quick return. That’s a big part of what happened in 2008.
So, what has Bernie said about this?
There are many videos showing Bernie lashing out at the big banks for causing the financial crisis. Here is one of our favorites from Bernie’s famous filibuster speech in 2010. His disgust with the “crooks on Wall Street” is palpable:
So, how does Bernie propose we deal with Wall Street?
He’s proposed a Financial Transaction Tax (FTT), also known as a Tobin Tax or Robin Hood Tax. This is a small tax applied each time a financial security (e.g., a stock, bond, or similar financial instrument) is traded.
Would this really work?
The market crash of 2007-2008 has been both a lesson in the dangers of excessively risky financial behavior, and a tremendous expense for American taxpayers who paid to bail out the banks. Implementing an FTT would both dissuade high-risk and high-frequency trading and generate revenue to rebuild our infrastructure, improve our safety net, and make higher education affordable. Bernie has proposed that the revenue from the FTT would go towards making all higher public education tuition-free.
What has Bernie said about FTTs?
In a 2013 press release, Bernie argued that an FTT “would reduce gambling on Wall Street, encourage the financial sector to invest in the productive economy, and significantly reduce the deficit without harming average Americans.”
What specific policies has Bernie supported?
Bernie has praised Senator Tom Harkin (D-IA) and Congressman Peter DeFazio (D-OR) for introducing the Wall Street Trading and Speculators Tax Act in 2013, and has gone on to introduce the Inclusive Prosperity Act of 2015 during the current Congress.
Expanding the Social Safety Net & Increasing Access to Opportunity
Bernie has taken an active stance on fighting structural inequality in several ways. He supports strengthening the social safety net and increasing access to education. Here we take a quick look at each.
What does expanding the social safety net entail, according to Bernie?
Currently, average public in-school tuition rates are over $9,000 per year. This graphic shows the change in tuition costs since 1980:
Bernie believes that no student who is willing and able to go to college should be denied based on the income of their parents. As a higher education is closely correlated with economic attainment, tuition-free public higher education is also a part of Bernie’s essential social safety net. The College for All Act, which he introduced, would make all public colleges and universities tuition-free. This proposal, and other education-related policies, are detailed at the the Education issue page.
Bernie believes the challenges facing our healthcare system are not just structural — they’re life and death. That’s why universal healthcare is the foundation of his health care policy. Though he voted for Affordable Care Act (otherwise known as “Obamacare”), Bernie believes that the measure hasn’t gone far enough to provide adequate healthcare for all. Check out this editorial where he passionately argues for a universal Medicare-for-All healthcare system as well as an expansion to Medicaid. Additionally, he’s sponsored legislation to curb drug costs and tackle fraud in the industry. His policy prizes the health and wellness of the individual over corporate profits. Learn more about all of these policies at the Health care issue page.
Creating and Keeping Better Jobs
Bernie has long fought to increase the minimum wage so every working American can live rather than fight to survive. In fact, one of the very first bills he introduced to Congress was the Livable Wage Act of 1993, a bill to increase the minimum wage which he reintroduced several times thereafter.
What’s the state of the minimum wage in America today?
Over the past 40 years, the cost of living has increased significantly while workers’ wages have stayed flat despite commensurate increases in the level of productivity. Even as the wages of young college grads have been in decline and employers continue to slash benefits, CEO pay is up nearly 1000 percent percent since 1978 (double the stock market growth in the same period). Essentially all of the new money made has gone straight to the top one percent, leaving most workers behind.
What’s Bernie doing about raising the minimum wage now?
In a statement made before a Republican-blocked budget amendment that would have raised the minimum wage, Bernie called on fellow lawmakers to “stand today with the tens of millions of workers who are struggling to put food on the table, to take care of their families.”
In July 2015, Bernie introduced a bill that would raise the federal minimum wage to $15 an hour by 2020. Hundreds of top economists signed a letter supporting his proposal. Learn more at the Minimum Wage issue page.
So things are bad for everyone, wage-wise, but don’t women make even less? What’s Bernie doing to address the gender wage gap?
They do, unfortunately. Bernie has been consistently outspoken about the need to establish pay equity for women workers. He voted for the Pay Equity Bill, and spoke out when it failed to pass by saying: “If the U.S. Senate had 80 women rather than 80 men as it does now, this bill would pass immediately. It is absurd that women receive 77 cents for every dollar a man makes.”
In addition to being a part of his twelve point Economic Agenda for America, pay equity for women workers is an integral part of Bernie’s platform for the 2016 presidential election. Learn more at the Wage Gap issue page.
And what about creating new jobs?
Bernie believes that the fastest way to create millions of jobs is to rebuild our crumbling infrastructure and he’s been saying so for decades. In his introduction to The Rebuild America Act of 2015, he noted:
“There’s a reason that investing in our infrastructure has traditionally enjoyed bipartisan support in Congress. It’s a good idea. It creates jobs, income, profits and tax revenues. It lays a foundation for the efficient operation of our economy in the future.”
The proposed bill would create 13 million good-paying jobs by investing $1 trillion over the next five years, still over half a trillion short of the increase which the American Society of Civil Engineers (ASCE) has recommended by 2020. Learn more at the Infrastructure issue page.
What’s he doing to keep jobs in America?
Bernie has led the fight against NAFTA, CAFTA, and the Permanent Normalized Trade Agreement with China.
Check out Bernie in 1993 railing against NAFTA on the House floor before voting against it:
As Bernie mentions in his editorial, these trade deals have off-shored a massive amount of decent paying jobs, and have closed tens of thousands of factories across our country. Bernie believes we should have trade agreements that invest in America, and not off-shoring jobs. Learn all about Bernie’s trade policies here, but get a sneak-peek here, with Bernie’s quote on his opposition to the Trans-Pacific Partnership:
“Let’s be clear: the TPP is much more than a “free trade” agreement. It is part of a global race to the bottom to boost the profits of large corporations and Wall Street by outsourcing jobs; undercutting worker rights; dismantling labor, environmental, health, food safety and financial laws; and allowing corporations to challenge our laws in international tribunals rather than our own court system.”
How else does Bernie plan on supporting American workers?
Bernie believes that our jobs have to get better and better because happy and healthy workers will lead to increased productivity and a stronger economy. People are now working two and three jobs just to reach ends meet. 66.5 percent of women and 85.8 percent of men are working more than 40 hours a week, many of them without paid vacation for leisure time, and little to no paid sick leave forcing them to go into work sick.
Bernie supports paid medical leave, paid family leave, and is a strong supporter of workers’ rights, via unions and workers’ co-ops. Learn more about these and more of his policies in this area at the Workers’ Rights issues page.
Reforming Broken Criminal Justice & Immigration Systems
The American criminal justice and immigration systems perpetuate inequality, breeding crime and poverty instead of community and economic opportunity and must be revamped from the ground-up.
What’s the criminal justice system like in the U.S. today?
The U.S. has more people behind bars than any other country in the world, a fact Bernie calls an “international embarrassment”, particularly because our mass incarceration disproportionately affects people of color.
The majority of the U.S. prison population is male and under the age of 40, and a disproportionate amount of them are of people of color. Young black males are six times more likely to be arrested than young white males. Of black men aged 20–34 without a high school degree, 37 percent are incarcerated, while only 26 percent are in the workforce.
The hard data speaks volumes — incarceration rates among both blacks and Latinos have risen much faster than for whites:
What does Bernie want to do about fixing our criminal justice system?
Instead of criminalizing people — particularly disadvantaged communities of color — we should be giving people the opportunities to be contributors to our society and economy. In Bernie’s words, it is an “unspeakable tragedy” that 1 in 3 black boys born today can expect to spend time in prison. It is imperative that our criminal justice system is reformed from the ground-up.
What’s the deal with our immigration system and how it affects economic inequality?
Bernie feels our current immigration policies force high-attaining individuals who are the backbone of the American economy — in industries as essential as agriculture, service, and construction — to live and work in the shadows. For this reason, Bernie strongly supports a “responsible path to citizenship” for the 11 million undocumented immigrants in the country today and a general re-haul of our immigration policies.
Please visit the Immigration issue page for the full run-down on Bernie’s policies and record on this important topic.