Should Capitalists Really Be Afraid Of A Bernie Sanders Presidency?

* On April 8, 2020, Bernie Sanders dropped out of the presidential race, paving way for Joe Biden to be the Democratic presidential candidate. Bernie's views were too extreme, even though proposals such as UBI and healthcare for all is needed now more than ever during the pandemic.

Sooner or later investors will stop freaking out about the coronavirus. We will become inured to the word and to the daily death toll numbers just like how we've become inured whenever we hear about something tragic has happened on the news.

In the long run, I'm hopeful that a lot of positives will come out of this coronavirus-induced market panic. I'm hopeful that as early as this summer, we'll be able to look back on this time period and wish we had bought more equities.

Unfortunately, for a capitalist, there is no time to rest. As capitalists, we must always be aware of the next variable that may benefit or hurt our wealth creation goals and adjust accordingly. Thus, after the panic surrounding the coronavirus starts to fade, I'm certain investors will turn their focus on the Presidential race.

Democratic Socialist, Bernie Sanders has a decent chance of becoming the Democratic nominee for the President of the United States. It's basically a two-man race between Bernie and Joe. As Bernie's popularity grows, given his anti-capitalistic policies, so will volatility in the stock market.

A Bernie Sanders Presidency

If Bernie Sanders beats Donald Trump in 2020 (~20% chance), we should expect the S&P 500 to correct by at least 20%. Perhaps the market is already baking some of this Bernie risk in. After all, Bernie has been one of the most vocal candidates against big corporations. And the S&P 500 is made up of the largest 500 corporations in America.

Besides potentially losing lots of money in the stock market, the other fear is that American workers will have to pay higher income taxes to pay for universal healthcare, free college, and wiping out more than $1.6 trillion in student debt. That's not a bad trade if you are paying high healthcare premiums and have kids who plan to go to college.

As I reflect on Bernie's rise, even though I'm a diehard capitalist, I've come to realize that Bernie could actually be the best thing for me and my family.

The main reasons why I've decided to get back on the saddle is due to my $2,380/month family healthcare bill and looming $4,000+/month preschool tuition bill for two children.

With Bernie as president, instead of expending a lot of my time and energy trying to make more money, I could throttle back and spend a lot more quality time co-raising my precious 10-week-old and 3-year-old. They sure grow up quick!

I'm just not sure whether Bernie can raise taxes high enough to pay for everything, but let's look at how he plans to pay for all his programs.

Related: The Net Worth Of Presidential Candidates

Bernie Sanders's Proposals To Raise Revenue

Sanders said on Stephen Colbert, “Is healthcare free? No, it is not. So what we do is exempt the first $29,000 of a person’s income. You make less than $29,000, you pay nothing in taxes. Above that, in a progressive way, with the wealthiest people paying the largest percentage, people do pay more in taxes.

In an interview on CBS's “60 Minutes,” Sanders said Medicare for All would cost $30 trillion over 10 years.

Sanders identified nine methods to finance the plan, which when combined, would raise about $17.5 trillion over a decade. Unfortunately, that still leaves a $12.5 trillion shortfall!

Here are his revenue-generating proposals:

  • Create a 4% income-based premium for employees that exempts the first $29,000 of income for a family of four. This would generate $4 trillion.
  • Enact a 7.5% income-based premium that employers pay, excluding the first $1 million in payroll. This would raise $5.4 trillion.
  • Eliminate health tax expenditures. This would save $5.2 trillion.
  • Tax capital gains the same as income. This would raise $2.5 trillion.
  • Raise the federal corporate tax rate back to 35% before Trump became President and direct $1 trillion of the revenue towards financing Medicare for All.
  • Raise the top marginal income tax rate to 52% on income above $10 million to fund universal healthcare.
  • Lower the estate limit well below the $11.58 million per person and raise the estate tax rate above 40%

Most of these revenue-generating proposals aren't too punitive for most Americans. The main proposals I would be concerned about are:

  • The 4% income-based premium paid by employees who make over $29,000
  • How badly corporate profits will get hit and companies will get devalued if the corporate tax rate goes back up to 35%
  • The estate tax level. If the estate tax level goes down to $1 million per person, people with more wealth will probably end up spending more money while living. This could be a good thing.

Higher Corporate Tax Rates

For background, the 2017 Tax Cut and Jobs Act (TCJA) reduced the top US corporate tax rate from 35 percent to 21 percent and the average combined federal and state rate from 38.9 percent to 25.8 percent.

As a result, the top US corporate tax rate, including the average state corporate rate, is now lower than that of all other leading economies in the G7 except the United Kingdom (with a 19 percent rate). Further, it is slightly below the average rate, weighted by gross domestic product (GDP), for the other Organization for Economic Co-operation and Development (OECD) countries.

Maximum Corporate Tax Rates Among Leading Economies / Countries

Lowering corporate tax rates is good for investors because earnings go up. The greater the earnings, the more money for R&D, expansion, and maintenance. Balance sheets are stronger and share prices move higher if valuations do not change.

If Bernie Sanders becomes President and raises corporate tax rates by 10%, then we should see on average, a 10% decline in earnings, all else being equal. Investors should, therefore, expect the S&P 500 to sell-off by at least 10% if Sanders win.

Higher Income Tax Rates

Believe it or not, I can't find the definitive income tax rates proposed by Bernie Sanders. There seem to be only versions from when he ran in 2016 and various versions today. Maybe I'm just not looking hard enough.

The most helpful website I found that explains how Bernie's tax plan would affect you is The disclaimer says it is not officially affiliated with Bernie Sanders and it was last updated in July 2019. Regardless, I thought it would be fun to input some numbers.

Given I have a new goal of trying to earn $350,000 a year by 2022 to take care of my family of four in expensive San Francisco, I used this income figure to see how much more I would pay under Bernie's plan.

Here's what I got.

According to the website, my annual disposable income would be $15,536 HIGHER with a Sanders tax plan. How could that be given $350,000 is a top 5% income in America?

The answer is because my family of four is paying $2,380 a month in healthcare premiums. I'm guessing that I'm paying $13,024 more a year in taxes under Sanders's plan in EXCHANGE for saving $28,560 a year in healthcare (free healthcare). It sounds like a great deal, if true!

Whatever Bernie decides are the final income tax rates, the ultimate goal is to have the vast majority of Americans get more healthcare benefits than the higher taxes they will pay.

Below is a chart that highlights Bernie's proposed marginal income tax rates (not definite) versus the current marginal income tax rates (definite).

Under the proposal below, my income tax doesn't go up because the tax rates are the same up to $500,000 for married couples. And if the tax rates are really the same or similar for up to $500,000 for married couples, then 99% of Americans won't really be paying more in tax.

So how can I pay the same amount of taxes under Bernie's proposal, but save $15,536 a year on healthcare? Something isn't right.

Bernie Sanders' Proposed Marginal Income Tax Rates

However, based on the final chart below, we find out the answer.

Although I will be paying the same amount of income tax, my annual healthcare spending will go to $0 and be replaced with a 4% income-based premium tax on taxable income. In other words, I will now be paying 4% of my potential taxable income ($325,600 X 4% = $13,024) in lieu of our $28,560 healthcare costs.

The 4 percent income-based premium tax paid by employees is highlighted on Bernie's official website. Here is his official document explaining how he plans to pay for free healthcare for all. It sounds like a great deal.

Bernie's Real Marginal Income Tax Rates

Unfortunately, it makes no sense that marginal income tax rates would stay the same up to $500,000. The BernieTax website is wrong, but it does give some helpful calculations as to what happens to cash flow.

Although Bernie Sanders keeps assailing billionaires for not paying their fair share of taxes (so as to garner the most amount of voter support), I'm assuming he is logically going to raise taxes on the top 50% of American income-earners.

Bernie Sanders' real marginal income tax rates probably look something closer to this.

Bernie Sanders' Proposed Marginal Income Tax Rates

Everybody's marginal income tax rates go up, except for those making up to $9,525. That is below poverty wage, as I've highlighted in a previous post. Then again, the proposed income tax rates don't account for Bernie saying taxes are going up for everybody BUT those making under $29,000 a year.

Under this more likely Bernie Sanders marginal income tax plan, a $350,000 income would have to pay roughly $19,500 more in taxes. That's OK if my $28,560 annual healthcare premium is completely wiped out, as that would increase my disposable annual income by $9,000. However, if I'm then taxed a 4% income-based premium equal to $13,024, my disposable income would go down $4,024 a year.

I'm assuming paying more income taxes and paying the 4% income-based premium is probably what Bernie Sanders has in mind for most Americans. In my case, the additional $4,024 a year in cash outflow isn't huge because I'm already paying a massive amount in healthcare premiums.

Under the above Sanders income tax proposal, earning up to $100,000 per person is probably ideal. $38,701 – $82,500 is taxed at a 26% marginal tax rate, while the remaining $17,500 is taxed at a still reasonable 28% marginal tax rate. You'd end up paying $4,000 a year in income-based premium to cover all healthcare costs, which is a good deal.

After you start earning over $157,501 per person, however, you're now paying a 36% marginal income tax rate. That doesn't sound too good since you've also got to pay state income tax and the 4% income-based premium.

I just don't know many people are willing to grind too hard to earn $250,000+ after standard deduction and pay a 44% federal marginal income tax rate plus a 4% income-based premium. Do you? People will find a way to hide their income or figure out other tax-saving strategies.

If Bernie Sanders Becomes President

Based on what we know so far about Bernie Sanders' proposals, the ideal financial scenario should Bernie become president is:

  • Make between $50,000 – $150,000 per person / $100,000 – $250,000 per couple, depending on location and lifestyle desires
  • Decrease your weighting in stocks and increase your weighting in bonds, real estate, and cash
  • Donate more to charity and spend more of your estate while living to get down to his new lower estate tax limit figures
  • Work less and relax more because you no longer need to save as much for healthcare, your children's education, and retirement

Bernie Sanders has probably purposefully not been explicitly clear about his income tax plan because he doesn't want people calculating how much more in income taxes they will probably have to pay under his presidency.

All we know is that individuals making under $29,000 a year are probably not going to have to pay more taxes if he keeps his word. We can guess that married couples making under $58,000 will be safe too. We can probably also assume that household income can increase by $5,000 per child and not have to face increased taxes either.

The problem with Bernie Sanders' revenue-generating proposals to pay for Medicare For All is that he's still $12.5 trillion, or 42% short. Therefore, it is only logical to assume that once Bernie enters office that he will raise taxes even higher.

If Bernie Sanders win, I will forgo my extra 10 hours a week of grinding to accumulate more capital in order to retire again by September 2022. I will be less stressed, happier, and have more time to spend with my wife and kids. Paying $28,560 a year in healthcare on top of potentially paying $48,000+ a year in preschool for two kids is a real back-breaker.

Unless the coronavirus, between now and the November election causes a recession in the United States, it's hard to see Bernie beating Donald Trump. The stock market was near an all-time high, unemployment is near an all-time low, and the economy is still strong overall.

Although nobody wishes the coronavirus to spread, if it aggressively does, it could actually help boost Bernie Sanders' chances of winning.

I like how Bernie is asking a greater percentage of American workers to pitch in to pay for everything. I think his heart is in the right place. However, as someone who has spent every day since 2009 trying to help folks achieve financial independence for free, it's very hard to change what people have become accustomed to.

As soon as you ask someone to pay for a benefit, those people tend to disappear. Over the years, I have had over a thousand people demand that I help them, without being thoughtful of my time. There is seldom an offer to even pay for a covfefe or a meal. Nevertheless, I continue to write because it feels good to help folks slice through money's mysteries.

When everybody wants everything for free nowadays, it's hard to see Bernie's plan succeeding.

Readers, will your actions change if Bernie Sanders becomes president? Will you start rapidly spending your estate to avoid the death tax? Will your work habits change? I know we're talking politics in this post, so please keep comments civil, otherwise, they will not be approved.

Note: I'm buying stocks as I always do after a 10%+ correction by funding my daughter's 529 plan and my Solo 401(k), SEP IRA, and after-tax investment accounts. Here are my thoughts on the stock market will bottom.

105 thoughts on “Should Capitalists Really Be Afraid Of A Bernie Sanders Presidency?”

  1. Meritocracy

    Sam and Robert, just to weigh in and give my two cents from a microecon standpoint, I have to agree with Sam that I would not work the hours that I work if I had to pay a marginal tax rate over 40%. I am a patent attorney in the pharma industry and work pretty long hours. I am pretty passionate about and dedicated to my work, and it’s not surprising that I am a single taxpayer with no children. Many of my colleagues have also delayed or given up on having a family because of their preoccupation with their jobs. Many colleagues have international backgrounds, and we have had discussions over the years on what brought us to the US (and in my case, what made me stay in the US). The most common answer I hear is that no other country rewards hard work the way the US does in a way that is commensurate with the effort that is put in. For example, patent attorneys in Europe do not work the long hours that US attorneys work, but even if they did, the payoff in Europe would not be what it is in the US due to taxes and the tendency to equalize income and shun what is considered to be exorbitant earnings. It is in the US that we have experienced that we are able to earn and keep to do with as we please more of the fruits of the above-and-beyond hours and effort we have put in. I view this as one way in which the US stands for liberty and meritocracy.

    When I visit Europe for business, many there tell me that they don’t want to work those long hours anyway, so they’re glad they do not live in the US. I take that to be a fair point, but then the people who want to put in the long hours and go where the ceiling is much higher will not stay. Penalizing the high earners or the hard workers with higher marginal taxes is not a good way to retain those earners/workers.

    With a 40% or more marginal tax rate (including for long term capital gains), my stake in my work has just decreased. Robert, you say that more money is more money, which is technically true, but the stakes have definitely gotten lower for me for the same amount of work. With different stakes, people make different choices. There is also opportunity cost to consider. In my case, if I believed this new tax system is here to stay and not just a phase, I would do some research and look into moving to a different country that is more favorable for my situation. I would reconsider the advantage of living in the US versus another country that provides similar advantages without the taxation. In the past, I had always turned down job opportunities in Europe and Asia, but I would now actively look for opportunities elsewhere, targeting countries that have better conditions for me.

    The other choice I may make is to stay in the US but not work as much and decide to have kids so that I can finally start seeing a return on all the taxes I pay. I would start utilizing the public school system and the healthcare. Whichever choice I make under the high tax system, the country would lose a large chunk of the labor coming from me.

    1. Hi Meritocracy,

      Thanks for the followup comment. I really appreciate your point of view.

      However, I think your understanding of taxes might not be complete. In particular, I take issue with this comment: “…so that I can finally start seeing a return on all the taxes I pay.”

      The issue is that, whether you realize it or not, you ARE benefitting from all of the taxes you pay right now, with or without children. Let me explain.

      Taxes are the price you pay to maintain the society in which you are currently living. You said you’re a patent attorney. Taxes help maintain a society where people can live and work in order to buy the goods from companies that you represent in order to make your living. It’s not always a direct line, but without taxes, people would not be able to live the lives they live in this country. There’s a price you pay in order for your job to event exist in this country, and that price is higher taxes.

      Another example: Taxes associated with schools. Crime is lower in areas with good school districts. Taxes help pay for better schools. And regardless of having a kid in that school, you’re benefitting from that by not having your house broken into. You’re benefitting from being able to walk down the street without fear of being harassed by gags. You could also benefit by many of the sports programs or other events that schools usually host.

      Another example: Healthcare. If we had higher taxes in order to pay for better healthcare, the country as a whole would have a much stronger workforce because people would be healthier overall and better able to work. This would allow more people to buy the goods and services from companies that you represent which would allow you to charge more. This one might be heavily debated, but this is what I firmly believe. Additionally, I don’t know if you work at a law firm or for yourself, but if you work for yourself, I bet healthcare is one of your biggest expenses.

      The point is that I believe you are thinking about taxes too narrowly. If you don’t *directly* benefit from them, then they don’t make sense. However, society is WAY more complex than that. There are so many indirect relationships that are very hard to draw direct links between.

      Lastly, when thinking about whether or not you’d work for a marginal tax rate of 40% or not, think about this: What is the absolute minimum you’d work for per hour? As long as taxes don’t go below that number, you’re better off working. I’m sure you’ve done the math, but here’s how I think about it:

      Say you make $100/hr, but you personally value your time at $50/hr. As long as you’re making more than $50/hr, then it makes sense to keep going. It’s just bonus when it’s more. A 40% tax rate will still bring in $60/hr.

      Sam is in an interesting position because his time is valuable because he has a family. Whatever number he assigns to his family time is the opportunity cost associated with working. As soon as taxes bring his income below that, then it doesn’t make sense to keep working. However, as a single person, I think that number is substantially lower compared to someone like Sam.

      Using myself as an example, there’s really no number where I can definitely say that I shouldn’t work. My goal is to hit a specific number where I can stop working entirely. Every hour, regardless of the marginal tax rate, is more money towards that goal. I suspect your goal is similar, but if it’s not, please let me know. I would love to hear your perspective on this.

  2. Capitalists do not need to worry. It is possible to have a capitalist society and healthcare for all. As for costs, our current system is wasteful and as bureacratic as “big government”.

    I may be biased because I have a special needs child but I hope that enough people have compassion for others and don’t put profit before human beings.

    Libertarians might need to worry.

  3. I guess this is a nice thought experiment but last time I checked Biden had the Dem nomination locked up and Bernie is toast. Talk about a moot subject, why?

    1. There are still over 1000 delegates needed to get 1,991 to be the Democratic nominee. You never know.

      But I guess you are right. Why bother thinking and planning for anything. It takes too much effort. Good to just go with the flow.

  4. Lots of the comments seem to discuss the trade-offs between having more healthcare coverage and paying more in taxes.

    The third variable in the equation is the total US budget deficit, which the non-partisan Congressional Budget Office currently projects to be $1.0 Trillion for 2020, or nearly 2x as much as it was in 2016 before Trump was elected.

    Would you be ok increasing the budget deficit beyond $1.0 Trillion if it meant more people had healthcare? If not, are you ok with the deficit being $1T now?

    1. spaceassassin

      Unfortunately, I think the deficit is so great and intangible that it is beyond average comprehension. A group of people understand what a billion means, an even smaller handful understands what a trillion means or looks like. Whether the debt is 1T or 1.5T, I’m not sure people even understand or care at this point.

      A lot of people work for financially-unhealthy companies and run financially-unhealthy households, not sure an unhealthy government to any degree is a concern for many.

      I like to think I have a clue, and honestly, I’m not sure of the real impact of a 1T vs. 1.5T debt, other than I clearly understand the difference numerically-speaking. But due to the complexity of the machine and intertwined nature of the system across the world, I’m unsure of real-world consequences of another 500B.

  5. TheEngineer

    First of all, the majority of Americans (90 to 95 percents) do not understand the word “Capitalism”.

    Just because the United States have the most billionaires, most people assumed that the country is operating at full speed with capitalism.

    If you have a chance, do visit developing country such as Vietnam – where more than 50 percents of the population are self-employed and negligible social programs for the extreme poverty, you will place America on a different shade of the socialism and capitalism spectrum.

    Second, the majority of Americans vote on feelings and not technical – they are conditioned to act and behave in accordance to their feelings. Otherwise, 90 percents of Americans will vote for Bernie Sanders.

    Whereas, the minority wealthy Americans vote on technical – they built the social structure and conditioned the mass to live within.

    America is and will continue to be the greatest nation as long as racism is under control!

  6. One useful way to look at a question is to flip it, i.e. “Should Socialists Really Be Afraid of a Donald Trump Presidency?”

    All the social-media engineered ‘hating points’ of 2016 came to nothing. Things turned out pretty good. So is it possible to answer this question without being triggered into a hate-rant? We shall see, in the fullness of time.;-)

    1. Yep, he’s doing a fantastic job of locking children in cages. Truly top notch child locking-up.

    2. Mark Shields

      meanwhile we have socialism for the rich, and socialism to bail out farmers and no one bats an eye

  7. As a brit living in Europe, all I can say is that universal healthcare is great. If you want private health insurance on top of that, more power to you and it’s certainly allowed. Americans end up paying hugely over the odds for the same drugs and treatments available in other developed countries because health is a business, not a service, in the states.


      Sure – I work as a healthcare analyst in the US and I’ve learned a lot about the systems in other countries. I personally don’t like the government deeming what is less valuable vs. more valuable, encouraging physicians to practice this way vs. that way, encouraging consumers to be compelled to buy a defined product, and putting price controls on what each procedure “should” cost. I believe that prices though millions of individuals is the key to success w/ the government being the referee. Once the U.S. goes this route we close off other options, trying new things, and inhibits innovation, creativity, evolution, and learning. It not as simple as business vs service.

    2. It does seem to make sense to have universal healthcare and then pay extra for private health insurance. A healthy society is a strong society. But I don’t see as much wealth and innovation coming out of Europe as I do in the U.S.

      I think the reason is due to the tax and incentive structure here. What do you think? Why aren’t more Italians, Spaniards, and Greeks creating the next major life-changing technology?

      1. Granted, the USA is doing a better job of innovation than a lot of the world, but is a combination of factors. Also, innovation is concentrated in a few areas that do massively well. Not a lot of world-changing technology is coming out of Idaho, Mississippi or Alabama I’d say, despite having similar tax and health policies. Healthcare for people at a reasonable cost will not suddenly turn the USA into a backwater! You already have no problem with socialised military, police and schooling, why not health?

  8. I don’t understand why anyone would want to give more power to the government. In terms of the business perspective, they are the absolute worst at managing/spending money on both sides of the aisle. Until they actually fix the system, balance the budget and get out of debt they don’t deserve another dime of tax money.

  9. One area I never see discussed by any of Bernie’s supporters or others who proclaim taxing the wealthy is the removal of charitable deductions. Currently anyone can write off up to 60% of their AGI for charitable deductions effectively resulting in only 40% of your income being taxed. Even at Bernie’s highest rate of 70% you would effectively only be paying 28% of your AGI in taxes. Many of the ultra wealthy like Gates, Bloomberg, Zuckerberg, etc. give large amounts to charities and tax free foundations. When Hillary released a tax return for the 2016 contest, it showed she had given 1,000,000 to her husband’s own foundation (interestingly enough that was her only charitable deduction). As long as these loopholes remain, the talk of the wealthy paying more in taxes, is simply without merit and only intended for the masses who have very little understanding of the tax code. Clearly all of these individuals believe they can make better choices as to how their money is spent rather than giving it to the government.

  10. I wouldn’t get too worked up about it, either way.

    Bernie is unlikely to be much good at sneaky stuff so I expect both parties in both branches of Congress, as well as the Supreme Court, and the Constitution would have ample opportunity to render most of his agenda moot.

    I also think that, although he very well might get on the Democrats’ ticket, a candidate that would let the incumbent office holder present himself as a moderate will likely give a lot of people pause when it actually comes time to vote.

  11. Even if Bernie wins, I dont see Congress passing any type of medicare-for-all type bill along w/ tax increases. Never going to happen. It would be a shame if, as president, Bernie wastes all his political capital trying to achieve something like this while letting ACA continue to die on the vine. That’s a lose/lose. Strengthening ACA would go a long toward helping everyone. Once you achieve that, then see about offering a public option (medicare for all).

    But your post does highlight some important points that we, as americans, often miss. It’s possible to be better off and have higher taxes. I’d also say that with healthcare in particular, there are “network effects” that kick in when everyone has decent healthcare leading to a more productive (and wealthier) country. Republicans have successfullly peddled “cutting taxes” as the solution to everything for decades now, and for most people (and collectively as a country), it’s not worked out so well (other than a sky high stock market).

  12. “I just don’t know many people are willing to grind too hard to earn $250,000+ after standard deduction and pay a 44% federal marginal income tax rate plus a 4% income-based premium. Do you?”

    Sam, I love your blog, but this is such a stupid way to think, and it really discredits your reasoning quite a bit. Paying a slightly higher marginal tax rate about $250k is not going to discourage anyone from making more money or working harder. It is quite un-American to think that people will work less because they don’t want to make more money. If you give someone a paycheck but say, “Sorry, we’re going to take a few extra dollars away because the marginal tax rate went up,” they aren’t going to respond by refusing the entire paycheck. More money is more money.

    I will say that your situation is slightly different. Your goal isn’t to make the most amount of money possible but instead to have enough to support your early retirement. Bernie’s plan gets you there faster. But this is the outlier, not the norm.

    I’m sure you know this, but the idea behind taxes is that paying a little more benefits society more than an individual person would benefit by having those same dollars. A fully health-insured society is a healthier, happier, more productive society. This is something I want, and I am very happy to pay more to achieve it (my current annual income is ~$400k.)

    Additionally, my biggest desire from universal healthcare is to decouple healthcare from employment. I have switched jobs several times in the past ten years, and once or twice I lost access to a doctor that I really liked. That would not happen with Bernie’s plan.

    My final thoughts are this: No one likes their health insurance. Private health insurance is in the business of denying people coverage to support big bonuses for their executes. I love capitalism, but capitalism doesn’t work in the area of health insurance. And in situation when capitalism breaks down, the government needs to step in. In a world where there is one health insurer, people will have ultimate choice in doctors because every doctor would be forced to accept the only health insurance plan.

    1. Thanks. How much do you make or what is your marginal tax rate now so I can get an idea of where you are coming from.

      Over the years, I found that the people who are most for higher taxes turn out to be the ones who don’t pay them.

      I’ll speak for myself then. I will definitely not try and work more to make more than $250,000 a year if that is the marginal tax rate. Hell no. Time is way too precious.

      1. I haven’t done my taxes yet, but as I said above, I expect my gross income to be roughly ~$400k this year which will likely put me in the highest tax bracket. I will absolutely not refuse making more money despite higher taxes because more money is more money. Just because additional work means that I net less of the money earned from that additional work doesn’t mean it’s not worth doing.

        Also, was this a typo or not: “Over the years, I found that the people who are most for higher taxes turn out to be the ones who pay them.” To clarify: who do or do not pay them? I pay a very large amount of taxes, and I am ok paying more as long as it creates a better society for future generations.

        If you do end up reducing your income from $350k to $250k just because you don’t want to pay taxes, I very much look forward to the article you plan to write about this.

        Lastly, I do recognize that your in a unique position of financial independence where you can choose to forego income in favor of retirement. I look forward to this as well. I am currently in the income-accumulation phase of my life (34yo,) so amassing as much wealth as possible is my goal. Once the income from my investments surpasses my salary, then I will have the freedom to give up additional income. Until then, more is more.

        1. This is good. Society needs High W2 income earners to pay the majority of our taxes. The fear is that we burn out high income earners we start thinking it’s not worth it anymore.

          Then who can we can to pay? The rest of us.

          Do you have children to support? If not, this is where things get tricky as well because you will start feeling bad about spending time making money, but earning less in a high tax environment while not spending time with your kids.

          1. The issue with Bernie is he’ll nuke a large segment of high income folks (aka doctors & nurses) too.

          2. Business Owners & high-income earners with families will most certainly change their work ethic, business structure, and business plans when the taxation rates change.

            I’ve known several business owners who decided to work less or did not expand their businesses after 2012 because they were already in the top income tax bracket of 39.6% and did not feel it was worth the effort.

            Some changed their businesses from type S to type C to avoid paying income taxes on paper profits during expansion. The assumption being that capital gains would be lowered in years where they’re distributing dividends, or if they choose to sell the business.

            Every Tax provides a disincentive for whatever behavior triggers the tax. Cigarette tax discourages smoking, gas tax discourages driving, income tax discourages working. Increasing it isn’t going to stop everyone from working, but some people will absolutely choose to work less.

        2. Thanks for your good attitude towards taxes Robert. I feel a bit guilty to say this, but I am in sales, and as the benefit vs effort equation gets worse via higher taxes, I will certainly forgo walking up early for east coast calls, responding on weekends, and flying around to meet folks while missing my wife and young child. I’ll let more ambitious people put in the extra effort. Plus with free healthcare, my early retirement just got about 800k closer! Maybe I could even scale down and retire while Bernie is president and have the system work for me. That seems like a logical move.

          1. Robert’s attitude is not good – it is naive. Government has proven time and time again to be the most inefficient manner at providing ANY service.

            To claim Society would be better off with more taxes paid into INEPT gov’t is downright ludicrous if not anti-american. I say to you – thinking that agenda driven, bureaucrats will make better spending decisions with our money than those of us who EARN it will just bring on a WAR in this country.

            But then again, this is just an academic discussion because Bernie Sanders will never be President.

        3. Meritocracy

          Sam and Robert, just to weigh in and give my two cents from a microecon standpoint, I have to agree with Sam that I would not work the hours that I work if I had to pay a marginal tax rate over 40%. I am a patent attorney in the pharma industry and work pretty long hours. I am pretty passionate about and dedicated to my work, and it’s not surprising that I am a single taxpayer with no children. Many of my colleagues have also delayed or given up on having a family because of their preoccupation with their jobs. Many colleagues have international backgrounds, and we have had discussions over the years on what brought us to the US (and in my case, what made me stay in the US). The most common answer I hear is that no other country rewards hard work the way the US does in a way that is commensurate with the effort that is put in. For example, patent attorneys in Europe do not work the long hours that US attorneys work, but even if they did, the payoff in Europe would not be what it is in the US due to taxes and the tendency to equalize income and shun what is considered to be exorbitant earnings. It is in the US that we have experienced that we are able to earn and keep to do with as we please more of the fruits of the above-and-beyond hours and effort we have put in. I view this as one way in which the US stands for liberty and meritocracy.

          When I visit Europe for business, many there tell me that they don’t want to work those long hours anyway, so they’re glad they do not live in the US. I take that to be a fair point, but then the people who want to put in the long hours and go where the ceiling is much higher will not stay. Penalizing the high earners or the hard workers with higher marginal taxes is not a good way to retain those earners/workers.

          With a 40% or more marginal tax rate (including for long term capital gains), my stake in my work has just decreased. Robert, you say that more money is more money, which is technically true, but the stakes have definitely gotten lower for me for the same amount of work. With different stakes, people make different choices. There is also opportunity cost to consider. In my case, if I believed this new tax system is here to stay and not just a phase, I would do some research and look into moving to a different country that is more favorable for my situation. I would reconsider the advantage of living in the US versus another country that provides similar advantages without the taxation. In the past, I had always turned down job opportunities in Europe and Asia, but I would now actively look for opportunities elsewhere, targeting countries that have better conditions for me.

          The other choice I may make is to stay in the US but not work as much and decide to have kids so that I can finally start seeing a return on all the taxes I pay. I would start utilizing the public school system and the healthcare. Whichever choice I make under the high tax system, the country would lose a large chunk of the labor coming from me.

    1. Just voted on the new IPAD voting machines in CA… BIDEN is first.. then you have to hit the MORE button three times before Bernie’s name even appears.

        1. Mark Shields

          saw screenshots of bernie being on the “see more”, so maybe it changes from person to person

  13. One of the biggest savings for MFA is reimbursement reduction. Medicare pays at least 40% less than traditional insurance companies for the same procedure. The savings would be in the multi trillions. The biggest loser other than health insurance companies is anyone who works in the healthcare industry. Doctors, hospitals, drug companies would lose trillions in revenue because the monopoly(US Govt) would pay whatever it wants to make the numbers work. This is also the main reason our country will not see MFA for several decades.

  14. Did you forget the wealth tax? That would help fill in the missing piece, right?
    I’m not too worried about Bernie. Our income is low enough. We won’t pay a lot more in taxes. I don’t mind paying more taxes for more healthcare options.
    I’m not worried about the stock market either. The Fed can deliver another emergency rate cut if Bernie is elected. Easy fix!

    1. Where will this emergency rate cut come from? Willing to pay the bank to hold tour savings with negative interest rates?

  15. I ran the numbers on my state, Massachusetts. Which is expensive, but this isn’t just Boston, it’s the entire state.

    Average child care + average non-elderly healthcare spending + average millenial college debt payment + average 2 bedroom apartment = $42K. That’s before eating any food or owning a car.

    I’ve known at least two individuals who have forgone starting a business because of this: one is a lawyer who wanted to start his own practice, but couldn’t see how he could possibly afford to (much higher student loan debt then average). You can live in below-average studio, you can eat Ramen, but you’ve still got to be pulling in close to $40K if you’ve got a single child just for basic survival things. How many businesses are even black there first year?

    Talking to the younger generation getting ready for college, there’s a lot of hesitancy to attend at all now.

    Declining entrepreneurship and college degrees is not going to prepare us well to compete in the global economy. These ideas (more college assistance, public option health care) are very popular with my age group. I’ve never heard the discussion go to “I could spend more time with my kids.” or “I want free stuff!”. It’s always been “I could start saving for retirement/college for my children. Or I could start that business. Or I could get an advanced degree and become a nurse/whatever.”

    We’ve saddled new households with unprecedented debt and healthcare costs. Those experiencing this are telling us that it’s causing economic inefficiency. It’s causing people to forgo preventative healthcare, starting businesses, attending college at all, switching jobs.

    Which isn’t to say these are the right policies, by the way. Macroeconomics are complex. But to readers who’s criticism of Bernie revolves around “the problem with spending other people’s money is you run out”, I’d encourage you to think a bit deeper. Bernies policies mostly move us back in line with the rest of the world, and much closer to the individual spending rates of recent US History. From the vantage point of us experiencing this new world of very high college and healthcare costs, it looks like a pretty broken system. If you don’t want socialism to continue increasing in popularity among young people, I think something else has to be proposed to move us back in line with recent history.

  16. I’ve seen this error in several analysis of Bernie’s Medicare for all Budget. They fail to take into account the amount we ALREADY PAY in Federal health care spending. This should be subtracted from the total cost (we don’t have to pay it twice). Currently this is about $1.88 trillion a year.

    $1.88 x 10 years = 18.8 Trillion which is greater than your shortfall. However, I usually use the Koch Brother’s study for the cost, to show that even an obviously biased source shows that M4A make both economic and moral sense. Something both sides should be able to rally around.

  17. Josephine Golcher

    I am born and bred in the UK.
    I am one of the few who remembers when the NHS came in amidst huge angst. I was 7. My mother cried, she could remember her children crying with earache and she had no money to pay for treatment.
    I had all my 3 children under the NHS, I didn’t have to pay a penny.
    My daughter returned to live in the UK after we emigrated, she was having a normal pregnancy but then everything went sick and she had to be moved to another hospital for a C section by a fast ambulance. Again no cost. Here they would have been bankrupted.
    I broke my kneecap on a visit to the UK ten years ago, I was transported to the local hospital by ambulance, was operated on, the kneecap was wired up and I had a special cast designed for flying. Oh and I had a pair of superior crutches thrown in. All for free.
    Some facts and figures from David Lazarus in the LATimes: the national expenditure on health care as projected by the government will reach $60 trillion at least if we do nothing. The US Government says we already spend $11,172 per year per person. Much higher than the next most expensive country, Germany at less than $6000. What do we get for this? Lower life expectancy and higher infant mortality rates, higher than many third world nations.
    What does the country get for supplying healthcare? I broke my kneecap at the end of June? I was able to return to my job as a science teacher in August. My baby grandson who struggled in the first hours after birth is now a fit and healthy teenager.
    And yes, I love Medicare. Which I did pay into for many years.
    But I do thank my parents and many like them who voted a “socialist government “ and Aneurin Bevin in all those years ago and guaranteed the health of my grandsons 70 years later.

    1. “No cost. Here they would have been bankrupted”

      Here’s the underlying premise that I love.
      “No cost”
      It’s free! The problem is that it is not free. It’s still very expensive. It just gets taken from others rather than the person actually using the services. And when the math doesn’t account for the actual cost to deliver goods (as bernie’s Plan doesn’t) then scarcity and rationing result. As people working hard to pay for your “free” service realize they don’t get anything for their extra work they decide “hell with it….I might as well work less and have a bunch of kids that I can’t afford to take to a doctor for an earache”. Tax revenue goes down. Employment goes down. General economic well-being decreases and with it the standard of living of the entire population.
      There are several problems with our healthcare system. Costs can be addressed in many areas and some of those increased costs are the result of gov involvement. Some of those costs are us subsidizing the rest of the worlds lower pharmaceutical costs so they can sustain their socialized medical services.

  18. The problem with socialists is they always eventually run out of other people’s money…

    There is no way Bernie can fund free healthcare with the tax rise proposed. As you say, there is a 42% shortfall. To fill the gap, everyone, apart from possibly the lowest paid, will have to pay substantially more taxes. For you Sam, the tax rise will make your healthcare bill today look like spare change.

    Railing against billionaires is window dressing, the reality is that everyone will pay more tax… And when, due to the Laffer curve, this doesn’t result in an overall rise in tax receipts, the deficit will go through the roof too.

    US healthcare is broken but this is not the solution.

    1. Yup. Don’t forget when money and resources dry up service goes down. There will most definitely be people deciding where to allocate resources.

  19. Sam,

    I saw this in a e-mail

    “At the debate a few weeks ago, Bernie Sanders said that he wants the minimum wage to be $15 per hour.

    $15 x 40 hr week = $600

    $600 x 52 weeks per yr = $31,200

    He wants free healthcare for all and was asked how he would pay for it. He said he will raise taxes to 52% on anybody making over $29,000 per year.

    52% of $31,200= $16,224 in tax
    $31,200- $16,224= $14,976 in pay
    $14,976 % 52 weeks= $288 per week
    $288 % 40 hr week = $7.20 per hr”

    Math does not look like a strongsuit for Sanders!

    1. spaceassassin

      Whew! Throw that email away. It’s either full of erroneous information or you misunderstand how our tax system works.

      He is not proposing a flat, 52% rate on anyone making above $29k–this is grossly inaccurate.

      1. Agree. This is misinformation.

        The 52% is a Marginal income tax rate.

        But the thing is, Bernie has yet to propose the exact marginal income tax rates yet, hence the confusion. I’ve looked and looked and don’t see anything from him.

    2. Andrew Webb

      Good lord… I saw this same attempt at misinformation on facebook. It’s called a progressive tax system… same as what we currently have in place.

      For someone making $31,200 a year their tax burden would be something like

      10% $0 to $9,700 .10*$9,700 = $970
      12% $9,701 to $39,475 .12*$21,500 = $2580
      22% $39,476 to $84,200 .22*$0 = $0

      52% $1mil or more .52*$0 = $0

      Total tax burden = $3,550 for an 11.38% effective tax rate
      Hourly rate after taxes = $13.29

      Critical thinking does not look like a strongsuit for Robert!

      1. This doesn’t even account for the standard or itemized deduction. The effective rate is even lower. The first $12,200 is taxed at 0%.

      2. Comprehension does not appear to be your strongsuit Andrew. You may think it is misinformation, but according to the e-mail that is what Sanders stated. You also are assuming that he would keep the marginal tax rates similar to what they are now. Do you have a source showing Bernie’s marginal income tax rate plan? Oh i get it, we are supposed to assume it will be similar under a socialist. I’ll pass, on your “critical thinking.”

        1. spaceassassin

          I just sent you an email with what Bernie actually said, please disregard the previous one you read.

          But in case you didn’t get it, it says that one of the ways that Bernie plans to pay for his changes is by “raising the top marginal income tax rate to 52% on income over $10 million.” This is quoted directly from Bernie’s Campaign website.

          Bernie is proposing a 52% marginal rate on income over $10M, not a flat, 52% on income over $29k/year. Just a little different.

          Again, this email is inaccurate and should be thrown in the trash. And my advice would be to be skeptical of most political emails you receive.

  20. It is not free healthcare, everybody pay for it depending on the income level. Instead of paying to the pocket of insurance company, everybody pay to the government. And the gov will negotiate down the cost of drug, medical treatment etc with healthcare providers. This is a win to the people vs pharma and insurance companies. I lived in France, Hong kong and now Japan, the ideas off Bernie for healthcare go along with the systems of France, Hong Kong , Japan…it benefit the people, not the big Pharma + insurance companies!!! My 7 year old kid pay zero for healthcare in Japan, while adults pay 30% of the bills ( the other 70% is covered by national insurance), When i lived in France, i only paid insurance to gov depending on my income bracket, and healthcare cost are zero; My son was born in public hospital in Hong Kong and the cost for C SECTION delivery + hospital stay is 500 HKD ie 63 USD!!!

    1. This is the real benefit of Medicare for All. Negotiating power with device and drug companies. I’m not even talking about brand new life saving drugs, I’m talking about the albuterol and insulin fiascos where basic, relatively cheap life saving drugs that have been around for decades are rebranded and price gouged. Also, get rid of for profit insurance companies who are taking a big cut without adding value. Being a physician, I know this may affect our salaries to a degree, but I think it needs to be done.

        1. Then go after that next. You need to start making changes to create any change. A broken system does not change overnight.

  21. My wife and I are US citizens, living abroad in a country which is considered footstep of China. Our son was born 3 months ago with a congenital which required a short stay in the NICU, several diagnostics (pre-birth and post) and a surgery. He is still not out of the woods completely and has potentially 2 more surgeries to go.

    We chose to go with the local government hospital and I have to admit, while the facilities may not be at par with the private hospital, treatment and care has been phenomenal. Doctors are well experienced and have put patient care at the forefront.

    Now the main point of this post … we paid USD 750 out of pocket for all the checkups, diagnostics, surgery, medications, medical supplies for home care. Our local private insurance (employer provided) will not cover congenital conditions, so the full expense was our out of pocket cost. The medicine alone if prescribed in the US, would have cost USD 1000+.

    If these countries can provide quality healthcare and medication at affordable prices, why can’t US do it?

  22. I’m continuously beating the drum much more these days to abolish the POTUS role in the USA. The UK doesn’t need a Queen. The USA doesn’t need a President. Just think of all the hot air that doesn’t need to be expelled every four years and it’s contribution to global warming. The money spent every four years on this dividing role would be saved lowering our carbon footprint. We have a congress. We have lifetime appointed judges. We don’t need a tiebreaker. We no longer have a need for this role. Thoughts?

    1. We need a president. Not really for domestic policy, but it is critical for foreign policy.
      Who does Country X negotiate with if there is no executive branch?

      1. What does the President know about foreign policy? Nothing. He has advisors. Make that team of advisors the team to handle foreign policy.

        1. This proposal would guarantee an entrenched SWAMP of unelected bureaucrats making life decisions of all of us. NO THANKS

          Proposals like this show we have let our education system fail.

  23. Could you imagine how many Boomers would accelerate their retirements if Bernie is elected? To everyone who votes for Bernie I would like to personally thank you for providing free healthcare to me and my family. I will be closing my small business and go from a producer to a taker. Please remember to pay your fair share.

    Thanks for all the free stuff!

    1. I sold my small business three years ago at age 49 to adopt this mindset. I have enjoyed every minute since. Traveled the world with my wife and teenagers. I may have to vote for Bern since the Republicans refuse to leave the ACA alone.

    2. If you are a baby boomer, you are basically at retirement age anyways… Also closing your small business will mean less competition for others. If you are ok with the decrease in income, then why not? I will pay my share.

      1. Hi V,

        I’m 49 years old so not quite a boomer yet. Yes, if I closed there would be less competition which always increases prices. I could spend down my savings and investments over time with no impact on my life. However, I won’t be upgrading my car as often, no more home remodeling, less trips and restaurants than normal, less clothes than normal. Less consumption than normal. The point I’m trying to make is that I will be fine but all the people who rely on my spending as well as the millions of other people who will curtail their spending will ultimately affect the people who Bernie is trying to help. Your fair share will turn into your unfair share because me and millions like me who currently pay the highest percentage of tax will no longer do so.

        Thanks, Bill

        1. I agree with Bill.

          Bernie is right to have a higher percentage of the population pitch in to pay for these services and a bigger safety net. However, based on what I have observed, people would rather just have things for free and tell other people to pay for them rather than help pitch in themselves.

          So unfortunately, once the masses see how much they really have to pay for what Bernie is promising, there will be tremendous pushback.

          1. Maybe they could use a few % points of the military budget to pay for the difference in healthcare. I live in Canada and after reading your blog on what healthcare costs per month my jaw hit the floor. That’s just insanity. My taxes in Canada are lower than someone living in California or New York state at top bracket yet we have free health care and subsidized university and colleges. So, its true you can have a very nice mix of both capitalism and a few “socialist” safety nets to make sure the Country’s population is healthy and well educated, i would say that’s a win for everyone. The only caveat would be the USA would have to take some dollars from the military budget to pay for it, nobody in this blog or anywhere wants to address the fact that the military spending is why you guys cannot afford it. Why not think about the cost per person for the largest military machine in the world and then examine what benefits you most?

            Keep up with the great blogs, love the site!

            1. That’s the cost of being a super power. One that the US bears and Canada enjoys the benefits of being friends with. Before the US, that cost was largely borne by the British Empire.

              The US has to maintain sufficient forces to credibly fight two wars…one potentially in Europe against Russia and one potentially against China in Asia. This is the same challenge that was faced by the UK.

              Is it necessary? I dunno but when we left this job to the European powers we had two world wars and since, none.

              There is also great geopolitical and economic value in being a super power vs a has-been super power.

              So great you have good health care. Would you mind spending 2% of your GDP for the common defense of democratic western nations before you castigate us for spending too much on military?

              Denmark isn’t carrying its fair share either. Just like before WWII. That worked out real well for them didn’t it?

              The issue with military power is it doesn’t pay to invest in the second best military if the best military is owned by someone that is expansionist.

              Russia may not be sending tanks into Europe like it did with Georgia and Ukraine but it’s not because it’s not expansionist. It’s because the US has spent a lot of money insuring that any acting on expansionist tendencies would result in defeat.

              China hasn’t simply overrun Taiwan (now that it can) not because it doesn’t want to but because the US 7th fleet still exists.

              And in 1991 Saddam would not have stopped with Kuwait and kept rolling into Saudi Arabia and controlled a large percentage of the world’s supply of oil if the US hadn’t had the military capacity to stop him. I’m sure that would have worked out great for Canada and everyone else.

        2. Fair points. I can see a lot of people cutting back on spending, including myself, if there is less after tax income. I suppose I hope that some of the effects go through such as Medicare for all, but not everything given the expense of it all. Several systems in this country are broken and we can poo-poo every idea till the cows come home, but sometimes you have to take a chance.

  24. Jean Switzer

    Do we really want our health care to be provided by the government? What president that has been elected on campaign promises has kept them? Do we really think it will be better if we turn our Healthcare over to the government?

    1. Yes. See Germany, UK, France, Taiwan, Japan, Switzerland, Spain, Sweden, Denmark just to name a few. (have links but cannot share on FS)

      Yes we do well in a few – we also pay 50% more compared to countries that have government run health systems for similar or worse outcomes. (have links but cannot share on FS)

      Why does this occur (among many)?

      1. Fragmented insurance coverage – health providers can charge higher costs because they have many payers.

      2. Lack of transparency in drug costs – The government cannot negotiate on drug prices due to laws in place.

      3. Litigious society – This is an additional burden on the system. Bad/poor outcomes should definitely be resolved and compensated. Litigation Insurance for doctors make practicing more expensive.

      4. Growth of healthcare administration vs healthcare providers – A result of the labyrinth of rules has caused bloat in the system. The ratio of administrators: doctors is now 10:1. In other words, for the one doctor that you see for 10 minutes, you’re also paying for 10 other people’s salary.

      Thoughts: I will be the first to admit there isn’t a silver bullet. Every system has its pros and cons. I believe the system we have now has many more cons than what it tries to bring. If we could blow up the system and try again, a single payer system will address the current issues by streamlining the payers and bring transparency to the system. It will bring other problems but they will be much smaller than the ones we currently have now.

      – on choice: Another way of framing the “choice” argument for the current system is two fold. 1. Currently you can have your choice of what doctors you want, but at a price. People generally choose what doctor is in their network, which gives you less choice than you think. 2. If you are underinsured with your current coverage, how much choice do you actually have if it costs thousands of dollars and you can’t afford it? Do you wait and put off healthcare for 6 months, do you have choice?

      Let’s get healthcare coverage affordable so people can access it, then we can worry about choice and how long it takes.

      1. HealthCare is not administered by the Government in Switzerland. In Switzerland, everyone is required to purchase insurance and pay for 100% of it themselves without employer Involvement. I know because I live in Switzerland. In Germany, there is the socialized System of Medicine, but if a Person has an income over a certain Level, they are allowed to buy private insurance and most who can, do so. I actually Paid more in Germany for the socialized insurance than I did in the USA. Socialized just means that higher income earners pay the premiums for lower income earners. Germany’s HealthCare Systems is postively bloated with highly Paid Administrators for the huge number of Krankenkassen. I am a doctor who has worked in These systems, so I have experience in These Areas. I work in a diagnostic specialty and I will soon start doing contract work remotely for Englands NHS because of their immense Backlog and shortage of physicians.

      2. Yah, maybe med school will be “free” but it’s years of extra schooling for not a huge gain.

        Even at the UK mean of £116K isn’t all that impressive and they make 1/3 more than French doctors (£84K). Over double that of Spain (£47K).

        US doctors make £219K mean.


        “A new report details the extent to which progressive taxation has harmed British patients. The NHS is in a state of perpetual crisis characterized by doctor shortages, long wait times, and rationing. The UK lost 441 general practitioners last year and had 11,576 unfilled vacancies for doctors as of last June.”

        From 2019.

        Germany has better doctors than us but they too can but insurance. Even so, I’d still rather go to Stanford or Hopkins. If I’m doing medical on a budget I’ll fly to Thailand or one of the other countries that specializes in medical tourism

  25. My family moved from Canada to the USA in the mid 80s to get away from Sanders’ socialism like government. My dad said he worked till August for the government every year. Sanders would be the worst thing to happen to America. Keep America Great! Not Kill America with Taxes. America thrives on Capitalism.

    1. 100% agreed. It’s sad that our healthcare system is screwed up so bad as to confuse everyone to how much better capitalism is than socialism. What’s more, when government comes in and subsidizes things like healthcare, education, and insurance, you only see classes divide further. The politically connected become the wealthy and then there’s just the “normal” folks like the rest of us. If a college president make $1,000,000 per year now, they’ll make that or more when government pays tuition, and it’s your taxes making that guy rich!

  26. Sam, I’m just the slightest bit offended that you claim to be a capitalist and believe Bernie Sanders is a good choice. I am definitely biased though!

    While I disagree with some of your facts, based on what I have read on Bernie’s plan, I don’t think free healthcare is the crux of the issue. To me, the real problem is Bernie’s core principals which are contrary to free market economies. When you review the few facts he is willing to provide in his plans, you quickly realize his targets are not billionaires as he claims, they are single digit millionaires too. Then they will target you and just move down the hierarchy of high income earners until it’s every income earner to pay for these plans. Government will have too, because he doesn’t come close to paying for all of his grand plans.

    The problem is he is against the basic idea of free markets and believes government is the solution. I realize this is supposed to be a new kind of socialism. I suspect that is the same argument every Socialist throughout history has made. You have to make that argument because the track record is so poor.

    My concern is the extent he wants to have government takeover. And it will grow from his plans now; it always does. Some others made some good points about the ability to get it done, but I am not willing to take that chance.

    Wasn’t it Ronald Reagan who said something along the lines of “you are always nervous when government shows up and says we are here to help” and “if you are in bed with government you sleep with one eye open”. i think he had Bernie in mind.

    Plus, remind me again what government runs well? And I think of Adam Smith and his arguments hundreds of years ago about the invisible hand and unintended consequences. A basic understanding of economics is in order, I believe.

    1. Yeah, and running the numbers that only address 58% of the costs, while claiming 100% of the benefits, just perpetuates the myth that is achievable.

  27. If Sanders is elected, I will not work as much. I’d no longer be motivated to earn like before. I can see many people would do the same. At some point that would become a major problem. It’s all fine and dandy though when you can spend other people’s money, but what happens when that runs out. His plan just has too many holes in it, too much pie in the sky for me!

  28. It’s irresponsible to run out numbers and scenarios when, as you mentioned, there is a 42% shortfall. Scale up everything you ran by that shortfall and your scenarios will turn out quite differently. Running numbers on an impossible scenario, i.e. 58% of reality, is not worth the time and also continues the myth that this solution is serious.

  29. Financial Freedom Countdown

    Even if Bernie is the president he can’t get any of his proposals pst Congress so I’m not worried.

    But I’m worried about staying alive considering the risk of coronavirus and steps to survive. Everyone needs to watch out since the WHO, CDC and governments are not handling it in a competent manner.

    1. Same things were said about Ebola, SARS, etc.
      When one considers the complexity of the world, the groups are doing about as well as can be expected.

      Remember the four dumbest words ever uttered: “It’s different this time”

      1. It’s not different this time…you just cited the time it worked out okay. What about 1918 where Philadelphia had to dig mass graves?

        And there are the folks that believe the stock market will always go up.

        Ignoring that Japan, Italy, and China are all below their peaks and in the case of Japan that’s 30 years later. 1929 took us 25 years to recover from.

        1. It is not different this time. The PHiladelphia example would NEVER derail an economy long term and did not then. There is enough evidence already compiled to show that vast majority of people with this virus experience a flu (or nothing) and will not come close to death.

          This is a short term economic uncertainty. Once markets start to feel comfortable that uncertainty is decreasing, they will continue long term trends of growth. There will be recessions but long term economies grow. That is unless countries turn against capitalism for more Socialist practices as evidenced by the counties you cite as examples of stagnation.

          I encourage you to not mix up Money and the humanity side of these experiences. Markets are not political and do not care about humanity. Markets are B&W and just want to make money.

          1. Japan turned socialist in 1990? Nope, the JSP lost in the 90’s. It turned away from socialism.

            And while it was WWII that ended the Great Depression the New Deal helped mitigate some of the economic hardship.

  30. Hey Sam, congrats on the new born! Have you considered that the entire economy system will go down hill with Bernie as president? or do you think business are going to stay in the US and pay more taxes without passing the costs to us the consumers? Do you really trust the government to make better decisions with your money? I sure don’t want a bigger government!!! Socialism destroys!!!

    1. Thanks! I’ve only considered a 20% drop in the S&P 500. I peg Bernie as having a 20% chance of becoming President, as he still has to beat Biden.

      Due to checks and balances in the three branches of power, nothing will ever be as extreme as any candidate wants.

  31. I find it interesting that those making 250,001-500,000 could see a 9% increase versus those making 500,001-2,000,000 at a 7% increase. What I do know is that with every elected president having their own tax policies and initiatives, it’s no wonder our tax code is so darn complicated! And that change is inevitable!

  32. Same, would you expect the same quality of healthcare w/ a Medicare vs. what we get today by paying $2.4K w/ private insurance ?

    If not, could there be a scenario where you choose to pay for a private insurance to get better coverage ?

    1. I’m assuming no. And there will be longer lines. I would hate to lose my family’s doctors, so I hope Bernie’s plan gives us options.

      Ideally, we want free healthcare with the same doctors.

      I pay so much insurance now that I’m flexible to pay to get what we want.

      How about you?

      1. I currently have workplace insurance, so my monthly premiums are ~$250 for entire family (2 adults + 2 kids).

        I really doubt that any future universal healthcare plan from Bernie will allow u to get similar healthcare coverage (because the demand increase would result in lower healthcare standards vs what we are seeing today w/ private insurance).

  33. Christopher Robbins

    I know a lot of people looking to offshore their wealth if the Sanders momentum in the primaries continues. I seriously doubt he has a large enough tax base residing in the U.S. to make any of his proposals work should he become president.

    Personally, I’m not that worried. He’s ineffective as a legislator and executive, he doesn’t compromise and has never had much luck building coalitions in Congress or among other elected officials in general. I see a Bernie election as a guarantee of more of the same.

  34. You probably don’t know anyone that has to pay premiums that is equal to a second mortgage and still not be able to use their health insurance because they also slapped on $10,000 deductible. I do and a 4% premium tax for healthcare would save them a tremendous amount of money that they could use to save or spend how they wish. Yes, we would pay higher taxes but I would also never have to worry about some medical bill that could wipe out my savings over night. I can create a new budget around his tax plan very easily. Sorry but these low taxes that we pay now only put people at risk to completely going bankrupt over night. It’s clear the private healthcare industry has no intentions at lowering costs either. I don’t like paying taxes either but if it saves me money in the long term (by shielding me from absurd healthcare costs) then that what is what makes sense. I definitely support Mr. Sanders.

    The capitalist system simply does not have a solution to lower costs because they don’t want to hurt their profits. I quite honestly have had enough of that.

  35. Hey Sam, great post. Right now, I own a small business that has 5 employees (including me) and nets a profit of around 500k a year. If Bernie gets elected, I’ll most likely become substantially more aggressive in my attempts to lower my taxes. So far, I’d say that I am middle of the road in terms of tax minimization compared to other small business owners. I’m not nearly as aggressive as a lot of business owners. However, I will certainly get more aggressive with a Sanders presidency. Apart from that, I’ll probably work less and be OK with my income going down. My wife and I only need about 200k a year pre tax to live so I’ll most likely worry less about making money if Sanders comes in and raises taxes.

  36. Mark A Kuipers

    You are forgetting a huge fact: This is something a president can propose and argue for, but it is the Congress that passes this and I believe that means both the House and the Senate. Even if the Democrats gain the Senate, it is highly unlikely that the votes would be there for this.

    That’s the beauty and the frustrations of our system.

    1. I agree. It’s part of the mental math of evaluating all the different candidates. Bernie can talk all he wants, but neither the House nor the Senate will bow to his will. Of course, I would have said the same about Trump and his ideas four years ago . . .

  37. Always remembering that any of his plans would have to go through Congress, and the chances of that happening without significant changes is small.

    We could end out like the Scandinavian countries: hard to be (meaningfully) poor; hard to get rich.

    1. I agree.

      I have been thinking a lot about this and believe from an equity standpoint, a Bernie Presidency may be pretty ok. He will huff and puff for revolutionary change but he has never authored nor managed an important bill through Congress in 30 yrs. He clearly does not know how to work DC. Vast majority of Congress people would NOT sign up to his programs. His Presidency would ultimately fail (which would be a good thing) but in the meantime, business would be totally free to go about making money.

      I feel pretty good about future all things considered.

      1. These liberal-socialist clowns have no chance to beat Trump. More liberal years ahead! Trump simply has to point to the scoreboard!

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