Bernie Sanders’ Proposals – Will It Be Useful for Malaysia?

Senator Bernie Sanders (of the U.S.) has introduced legislation to eliminate all student debt from the U.S.’ higher education system. Basically, it is to forgive debt of USD 1.6 trillion owed by 45 million graduates. To pay the estimated USD 2.2 trillion cost, a Wall Street speculation tax on financial services is imposed. Under the Sanders proposal, all trades are taxed at a rate of 0.5 percent for stocks and 0.1 percent for bonds.

Robert Pollin from the Univeristy of Massachusetts says such a tax could raise as much as USD 340 billion a year over the next decade. But Leonard Burman of the Tax Policy Center believes the potential revenue could be only one-tenth of that! There would be some evasion through options or routing transactions overseas, since U.S. (and other) financial engineers are good at clever financial shenanigans.

In addition, Bernie Sanders in 2016 had proposed restructuring income tax brackets for the U.S. taxpayer:

Current			Bernie’s Proposal
USD	Rate (%)		USD	Rate (%)
0-18,450	10		0-18,450	10
18,451 – 74,900	15		18,451 – 74,900	15
74,901 – 151,200	25		74,901 – 151,200	25
151,201 – 230,450	28		151,201 – 230,450	28
230,451 – 411,500	33		230,451 – 250,000	33
411,501 – 464,850	35		250,001 – 500,000	37
464,851 and above	39.6		500,001 – 2,000,000	43
			2,000,001 – 10,000,000	48
			10,000,001 and above	52

According to the U.S. Tax Foundation, the Sanders’ plan then would raise USD 13.6 trillion over 10 years and help reduce the U.S. budget deficit and debt (of over USD 20 trillion).

Maybe we should examine some of Sanders’ ideas for our own PTPTN scheme and in reducing national debt. Bernie Sanders had made those proposals because Wall Street had benefited from the bailout of banks under TARP in 2008 and Trump’s tax reduction plan for the rich in 2018. Inequalities have widened in the U.S. over the years. The case is similar for Malaysia – Danaharta absorbed the NPLs of banks and Danamodal recapitalised some banks. It is now time for some of these institutions (who make RM4-8 billion in profit annually) to pay through a transaction tax for resolving the PTPTN loans and reducing national debt.

Reference:

1. Bernie Sanders Unveils Education Plan to Eliminate Student Loan Debt, The New Your Times, June 24, 2019 (Emily Cochrane)

2. Bernie Tax www.bernietax.com

3. Bernie Sanders’ income tax brackets: How much would you owe? USA Today, May 12, 2016 (Austin Smith)