Alexandria Ocasio-Cortez has kick-started the Democratic tax debate with her 70% marginal rate idea

  • Alexandria Ocasio-Cortez, the young firebrand who just took her House seat to represent the Bronx, has sparked headlines by suggesting tax rates as high as 70 percent to finance a “Green New Deal.”
  • With little prospect of success under President Trump, the new House Democratic majority has avoided the issue in its initial legislative agenda.
  • But the party’s gathering field of 2020 presidential candidates won’t have that luxury.

The tax furor triggered by Rep. Alexandria Ocasio-Cortez has opened debate on a core question for all Democrats: Where should government get more money?

Virtually none doubt the need for new revenue. Aside from new programs the party favors, the federal budget deficit is already projected to top $1 trillion in 2019 and keep rising for years.

Ocasio-Cortez, the 29-year-old Democratic firebrand who just took her seat to represent the Bronx in the House, has sparked headlines by suggesting rates as high as 70 percent to finance a “Green New Deal.” That drew swift derision from House GOP Whip Steve Scalise, who summarized it as “Take away 70 percent of your income and give it to leftist fantasy programs.”

In fact, Ocasio-Cortez didn’t propose taking 70 percent of anyone’s income. She suggested applying the rate only to earnings beyond $10 million, meaning those affected would pay a much lower share of their income overall.

The top tax rate stood above 90 percent throughout the 1950s. But through deductions and tax avoidance, “taxes on the rich were not that much higher” then, the conservative Tax Foundation noted in a 2017 article.

The top rate remained 70 percent as late as 1981, the first year of Ronald Reagan’s presidency. The most affluent 1 percent paid a far lower average rate of 30.5 percent, however, according to a Tax Policy Center analysis. By 1989, when Reagan left office, the top rate had been slashed to 28 percent but their average rate dropped only slightly to 27.9 percent.