Bernie Sanders’s Tax Bill Would Wreak Havoc on the Working Poor

The bill designed to help poor people will only make them worse off.

Bernie Sanders, the self-professed socialist U.S. Senator from Vermont, is known for proposing some pretty radical things. From making college tuition “free” to providing “Medicare for all,” Sanders seems to be on a one-man mission to discover just how quickly America’s wealth can be depleted. Indeed, instituting just one of his spending proposals would push the country to the brink of bankruptcy, but enacting all of them would speed us over the cliff.

Unfortunately, he doesn’t seem to be stopping any time soon.

The Stop BEZOS Act

A couple of weeks ago, Sanders introduced a new tax bill before the Senate, specifically targeted at large corporations like Amazon and Wal-Mart. The bill “would impose a 100 percent tax on government benefits received by workers at companies with 500 or more employees. For example, if an Amazon employee receives $300 in food stamps, Amazon would be taxed $300.”

On its face, the bill is designed to alleviate the economic hardships faced by many near the bottom of the income distribution while also relieving some of the stress put on the federal welfare system. It is also explicitly aimed at reducing “income inequality” by increasing the tax burden faced by corporations owned by high-profile billionaires. Sanders reserved his most fervent contempt for Jeff Bezos and the Walton family who “enrich themselves off taxpayer assistance while paying their workers poverty-level wages.”

The problem is that Sanders’ plan will almost certainly hurt those he is purportedly trying to help.

The problem is that Sanders’ plan will almost certainly hurt those he is purportedly trying to help. By increasing the tax liability faced by companies who hire low-skilled labor, the bill will force corporations to lessen their reliance on low-skilled employees, leading them to lay off workers and reduce hours, while also disincentivizing any further hiring.

Loading Costs onto the Poor 

In truth, the bill is little more than a thinly-veiled, albeit more convoluted, minimum wage hike. But unlike the minimum wage, which applies to everyone equally regardless of their personal expenses, Sanders’ system would make it costlier to hire people who rely most heavily on government assistance. Such a system would discourage companies from hiring single mothers, the disabled, and anyone else likely to qualify for various welfare programs. The scheme would, therefore, hit the poorest families the hardest.

Indeed, the curious thing about Sanders’ new plan is that it would not make a single worker better off. If a company chooses to pay the tax, the worker receives no further benefits; if the company chooses to pay the worker more, thus eliminating the latter’s need for government assistance, the worker will be receiving the same net cash value as he or she was previously receiving.

And the working poor, the people Sanders has been using as political props, will be left holding the bag.

But ultimately Sanders’ tax plan is not about reducing poverty or decreasing federal welfare expenditures. It is about punishing wealthy corporations by imposing exorbitant costs upon them, in order to achieve the lofty goal of establishing “economic justice.” And the working poor, the people Sanders has been using as political props, will be left holding the bag.

Further Reading

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