Alexandria Ocasio-Cortez demonstrated during an appearance on CBS News’ “60 Minutes” that aired Sunday that she knows little of economics, her major field of study at Boston University.
The problem is that she allowed her far-left socialist leanings to get in the way of economic principles, simple logic, and basic math.
She told host Anderson Cooper that the answer to fighting climate change is to nearly double the top marginal tax rate on incomes above $10 million — from 37 percent to 70 percent.
“People are going to have to start paying their fair share of taxes,” she said.
"You know, you look at our tax rates back in the '60s and when you have a progressive tax rate system, your tax rate, you know, let's say, from zero to $75,000 may be ten percent or 15 percent, et cetera." Ocasio-Cortez continued.
"But once you get to, like, the tippy tops, on your 10 millionth dollar, sometimes you see tax rates as high as 60 or 70 percent. That doesn't mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder you should be contributing more."
Washington Post fact-checker Glenn Kessler observed that, “For the record, fewer than 0.05 percent of all U.S. households have income above $10 million. The @AOC proposal would not even be aimed the fabled top one percent.”
He added, “Some folks wondered how much money this would raise. My colleague @JStein_WaPo did the math: $720 billion a decade.”
In an era of $3 trillion+ annual budgets, $720 billion is a drop in the bucket.
But even that figure is a gross overstatement. Kessler conveniently left out another observation made by his Washington Post colleague.
Ultra-high marginal rates never live up to their estimated promise. Those finding themselves in that monumental bracket will do what they can to get themselves out of it.
Stein quotes Mark Mazur, former assistant secretary for tax policy in the Treasury Department as observing, “You’d certainly see some people under that system change their behavior to avoid the higher rate, which could significantly impact how much revenue it generates.”
As the Tax Foundation observed in 2017, “there are many studies that show that, as marginal tax rates rise, income reported by taxpayers goes down. As a result, the existence of the 91 percent bracket [of the 1950s] did not necessarily lead to significantly higher revenue collections from the top 1 percent.
But of greater consequence is that excessive tax rates tend to stifle economic growth. Lower economic growth, in turn, equates to lower tax revenue in government coffers.
The United States experienced the converse of this principle just within the previous 12 months.
In December of 2017 the president signed into law the Tax Cuts and Jobs Act, which reduced the corporate tax rate to 21 percent, and lowered individual income tax rates across the board. It went into effect Jan. 1, 2018.
As a direct result, unemployment dropped significantly — at record levels for blacks and Hispanics. After eight lackluster years under former President Barack Obama, economic growth has skyrocketed along with wages and consumer confidence.
Higher wages and business profits coupled with lower unemployment resulted in a spike in consumer spending and business investments, equating to a rise in government revenue.
An exact accounting won’t be available until later in the year, especially given that the IRS is temporarily closed — one of the benefits of a partial government shutdown, one might say.
But why stop at 70 percent? Ocasio-Cortez could look further back in American history to the administration of Franklin D. Roosevelt.
A couple of months after the Japanese attack on Pearl Harbor, Roosevelt lobbied for a 100 percent top marginal rate under the theory that "no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year."
Although he never got his 100 percent, he was able to raise the top marginal rate to 88 percent, which was eventually raised to the all-time high of 94 percent.
That nonsense ended in the early 1960s with then-President John F. Kennedy, who reduced the top marginal rate to 70 percent, Ocasio-Cortez’s benchmark.
House Minority Whip Rep. Steve Scalise, R-La., gave what may be the quintessential difference between Republicans and Democrats.
“Republicans: Let Americans keep more of their own hard-earned money,” he tweeted. “Democrats: Take away 70% of your income and give it to leftist fantasy programs.”
As conservative documentary filmmaker Dinesh D’Souza observed, “The top marginal rate was 70% in the 1980s before Reagan lowered it to 28%. Now some leftists want to undo the Reagan revolution & take the rate back up to 70. Dream on, losers. Not gonna happen!”
Ocasio-Cortez also told Cooper that she’s not overly concerned about being factually correct.
“There's a lot of people more concerned about being precisely, factually, and semantically correct than about being morally right,” she said.
Taxing Americans excessively must be the “morally right” thing to do in her world. One could counter that she can’t make a “morally right” decision without accurately knowing the facts.