Last week, Vox published an article titled “This simple calculator tells you how each presidential candidate’s tax plan affects you.” It couldn’t be more manipulative.
Vox’s calculator, despite its catchy headline, does not show how your overall economic situation might change under each candidate’s policy agenda. What it presents is a number Vox calls “your tax liability,” which includes things you would never think of as part of your tax bill—like the payroll taxes your employer pays on your wage or the tax you pay on a bottle of wine. Using Vox’s approach, which draws on a narrow, but largely correct, analysis from the Tax Policy Center (TPC), simply getting a raise from your boss would look like a larger tax bill—bad news. As a result, Vox’s calculator overwhelmingly favors Trump and Cruz, while suggesting that Sanders’s plan would have a negative effect on disposable income for the majority of Americans.
This is all a bit misleading. Final take-home pay—the amount of money you get to spend after the government takes its share and you have paid the cost of health insurance—has an exponentially larger effect on your life than your tax rate. Contrary to what is implied in Vox’s calculator, TPC finds that under the Sanders plan, middle-income the take-home pay of earners with employer-provided healthcare increases.
Taxes, in other words, don’t exist in a vacuum—what the government does with those taxes matters quite a bit.
A key part of the Sanders plan, for example, is health insurance. In Vox’s calculator, your tax rate increases to fund Sanders’s Medicare-for-All plan. But they’re not accounting for the fact that your employer will no longer be paying for your health insurance. Will you pay more taxes? Yes. But if your employer currently pays for your insurance, as is the case for about half of Americans, then companies’ newfound savings under Medicare-for-All will be passed onto you in the form of higher wages.
The impact of this healthcare system would be huge. The Kaiser Family Foundation finds that the average employer-sponsored insurance costs $17,545 for a family plan, and $6,251 for single coverage. Under the Sanders plan, employers would pay an additional 6.2 percent in payroll taxes and individuals an additional 2.2 percent tax to finance health insurance. Many Americans come out ahead in the calculation once we include this important detail.