The Great Clinton-Sanders Tax Divide

The candidates have very different ideas about how crucial government programs should be funded—and who is responsible for society’s well-being.

Brian Snyder / Reuters

On Thursday Hillary Clinton released the much-anticipated details of her paid family-leave plan, and those details are further evidence of a stark divide between her and Bernie Sanders on the topic of taxes. The candidates agree on a lot of things, but on taxes Clinton’s and Sanders’s positions represent markedly different visions of society.

The gulf between the two Democrats on taxes is perhaps most evident in the debate over paid family leave. Sanders supports the FAMILY Act, which would require employees and employers to each contribute just 0.2 percent of wages, an average of roughly $2 per person, per week. Only wages up to $113,700 would be taxed, meaning the maximum contribution possible—even for the highest earners—would be $227.40 per year. Clinton, on the other hand, would rely on increased taxes on only the wealthiest Americans to fund paid leave. According to her campaign website, “American families need paid leave, and to get there, Hillary will ask the wealthiest Americans to pay their fair share. She’ll ensure that the plan is fully paid for by a combination of tax reforms impacting the most fortunate.”

Clinton has pledged not to raise taxes on middle-class families, which she defines as those making $250,000 or less annually. As Clinton explained at the last debate, “I don’t think we should be imposing new big programs that are going to raise middle-class families’ taxes. We just heard that most families haven’t had a wage increase since 2001, since the end of the last Clinton administration.”

Sanders’s response was revealing:

When Secretary Clinton says “I’m not going to raise taxes on the middle class,” let me tell you what she is saying. She is disagreeing with FDR on social security, LBJ on Medicare, and with the vast majority of progressive Democrats in the House and the Senate who today are fighting to end the disgrace of the United States being the only major country on earth that doesn’t provide paid family and medical leave.

To Sanders, some things are worth investment from everyone, not just the super-rich.

Raising taxes on lower-income families may be a tough sell—after all, many of them are continuing to struggle post-recession. But Sanders is in a position to make that tough sell: The Vermont Senator—who this week called attention to the “greed, fraud, dishonesty, and arrogance” of financial leaders who have rigged an economic and political system “to benefit the wealthiest Americans in this country at the expense of everyone else”—certainly couldn’t be accused of being short on empathy for low- and middle-income workers.

The United States has a long history of programs that are universally funded and accessible, motivated by a belief that all families deserve some basic standard of living (granted, many families are nevertheless living far below that standard). As Matt Yglesias wrote in response to Clinton’s tax pledge, “The best and most effective American (and, for that matter, foreign) social programs are used—and paid for—by everyone, creating a virtuous cycle that keeps them reasonably effective and reasonably popular.” Clinton’s promise suggests that paid family leave—and other important programs—can and should be sustained exclusively with contributions from our highest income earners.

The current U.S. paid-leave system (or lack thereof) pushes one in four women back to work a mere two weeks after having a baby. It requires many workers to sacrifice their jobs and their economic security to take care of themselves or a loved one. It exacerbates inequality by placing paid leave far out of reach for low-income workers, while leaving it to employers to provide the benefit as a perk to the best educated and best compensated people in the economy.

A guarantee of paid family leave would benefit all of society. Paid family and medical leave would enable both parents to stay home after the birth of a new child, to take care of a sick family member, or address their own health concerns without fear of losing their jobs or their wages. Paid leave makes it more likely that women will return to employment after having a child, and it would help to close the persistent wage gap that still sees women making 78 cents for every dollar earned by her white male counterpart (black women and Latinas earn 64 and 56, respectively).

Clinton’s campaign promise to not raise taxes on those earning less than $250,000, particularly in the context of paid family and medical leave, ignores the fact that the social, economic, familial, and health benefits of the program—supported by Sanders and so many others—would exponentially outweigh the very modest tax it calls for. California implemented a plan similar to the FAMILY Act and the majority of workers haven’t noticed a difference in their paychecks.

To bring greater prosperity to America’s low- and middle-income earners wages certainly will have to go up. But that’s not enough. Shoring up the well-being of the country’s working and middle classes will require not just raising incomes but also expanding access to goods and services that improve families’ health and economic security. Yes, raising taxes on the wealthy is an essential step to creating a more fair economy and society. But that must be done alongside efforts to bring down the costs of big-ticket items such as childcare, education, housing, health care, retirement, and so on, all of which strengthen families and the overall economy—and, importantly, are likely to require funding beyond what additional taxes on solely the wealthy would yield.