Democratic candidate Bernie Sanders claimed victory in Tuesday’s New Hampshire primary after a shaky Iowa caucus last week.
alliantgroup’s own Dean Zerbe, Former Senior Counsel to the U.S. Senate Finance Committee, and former Congressmen Rick Lazio (R- N.Y.) and Joe Crowley (D- N.Y.) sat for a special edition Innovating America bipartisan roundtable discussion to discuss the candidate’s tax policy stances—ultimately choosing Tuesday night’s winner correctly.
In terms of the early primary states, Crowley noted, “these early states are extremely important for momentum and fundraising,” adding that spectators will have to wait to see who the Democrat’s nominee for president is in order to get a more clear picture as to who will take the House of Representatives and Senate in November.
The alliantgroup Strategic Advisory Board members both agreed that the four Senate seats at risk are in Colorado, Arizona, Maine and Mississippi, with Lazio adding that for the presidential race, battleground states will include Michigan, Wisconsin, Pennsylvania and Florida.
“There’s really only a handful of battleground states. This may be the smallest playing field in terms of actual battleground states in presidential campaign history,” Lazio said.
In terms of the tax policy stances of the current democratic candidates, the roundtable guests broke the conversation down into several sections.
The Wealth Tax
This is one issue that seems to divide certain democratic candidates for president, according to Lazio, who mentioned that both Mike Bloomberg and Joe Biden weren’t signing off on this tax on income.
Bernie Sanders, who currently leads the delegate count, as well as Elizabeth Warren both have proposed wealth taxes. According to Crowley and Lazio, Sanders’ plan is more aggressive.
“When people actually understand what this wealth tax means there is less and less support for it, even amongst people not in that category. It just sounds in many respects like it’s not growth worthy—not something that promotes growth in our economy,” said Crowley.
The panelists also noted that Bloomberg’s plan was to raise $5 trillion in tax revenue from his tax on the wealthy, which would come from the earned income of the most wealthy every year.
The Corporate Rate
Turning to the corporate tax rate, both Crowley and Lazio agreed that the ultimate goal from the democratic candidates is to raise it, likely not to the previous 35 percent, but roughly to 28 percent. In Crowley’s opinion, the sustainability of the currently lower tax rate is in question—adding to calls from democratic candidates to raise the bar.
Biden’s tax plan calls for an increase to 28 percent with a 15 percent alternative minimum tax, while a new provision in Sanders’ plan calls for corporations to hand over 2 percent up to 20 percent of the actual company value back to company employees. “These are pretty bold ideas,” Lazio said.
Capital Gains Tax
For small and medium sized businesses, this is where Lazio says people need to pay attention. As advocated by all leading democrats, instead of paying the 20 percent rate plus a 3.8 percent net investment income tax, you would now pay whatever the top rate for the candidate would be.
For example, Sanders has a rate at 52 percent and in some cases, candidates call for an additional payroll tax on top of that—leading to significant tax increase.
When looking at all of these tax proposals from democratic candidates, it’s important to keep in mind that democrats are “raising taxes not in the abstract, but for purpose,” according to Crowley.
“Looking at polling, democratic voters are concerned with health care, the greenhouse gas effects, global warming and education. All those things do add up… it’s not just about democrats raising money for the sake of raising money. It’s with purpose,” he said.
The Estate Tax
For a proposed estate tax, all top democrats eliminate the stepped-up basis provision while Sanders proposes to reduce the exemption to $3.5 million, and tax the value of estates up to $10 million at a rate of 45 percent.
Regardless of who ultimately takes the White House, both Crowley and Lazio agreed that Congressional movement on taxes isn’t likely prior to the election.
“I think the President talks about further income tax cuts for the middle class, and it’s a great talking point for the President, but it’s really hard to imagine much of anything of consequence,” said Crowley.
According to Lazio, in all cases for democrats, marginal tax rates are up, there is a boost in payroll taxes and a sense of taxing long-term capital gains and ordinary taxes while reducing exclusion on estate tax and increasing rates. “If democrats have a strong night and run the tables on election night, a lot of these provisions many think are longshots could be debated and in play,” Lazio said. “It’s important to stay alert to these changes and proposals.”
If republicans keep the senate? Lazio and Crowley both agree most of the tax proposals would “end up in the graveyard.” The pressure of having to raise taxes would be further resisted if republicans were able to add seats.
“This is as good as it gets from a tax relief standpoint for the foreseeable future. I don’t see any possibility that capital gains rates get lower than they are right now. I don’t see any possibility that top marginal rate get any lower than it is right now. I don’t see any possibility payroll taxes go down and people should plan accordingly,” said Lazio.
Crowley’s response? “That’s in a democrat or republican regime.”
So when will we have a better idea of what the future holds? According to these alliantgroup experts, it will come on Super Tuesday on March 3, where 40 percent of the delegates are up for grabs.