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Study: Most taxpayers would save a lot of money under President Sanders

Bernie Sanders proposes raising taxes on virtually every American, no matter how little money they make. But he has long argued that Americans will get more back in benefits than they pay out in additional taxes — and a new Tax Policy Center analysis suggests that's right.

It finds that the average household in even the 95th percentile of American households would save money under a President Sanders because of the new government benefits they receive.

The average household would see a tax increase of about $9,000 under Sanders's plan, which is daunting. But they would get an average of about $13,000 in benefits — largely from his universal health care plan.

Here's how that would break down by income quintile in 2017. Notice how the red bar, representing the average tax increase, is smaller than the blue benefits bar all the way until you get the richest fifth of households.

The TPC analysis looks at Sanders's biggest spending proposals: single-payer health care, free public college tuition, expanded Social Security, family and medical leave, and comprehensive coverage for long-term services. It assumes that college attendance wouldn't increase, that students wouldn't switch from private to public colleges, and that public colleges wouldn't increase tuition.

Sanders's plan greatly helps low- and middle-income households

The poorest 20 percent of households have an adjusted gross income of about $3,600. This is the amount of money they make in a year, minus certain deductions like college tuition and alimony.

Under Sanders's plan, that group would get an average of $10,265 in benefits, while only paying $209 more in taxes per year. That's a pretty good tradeoff.

It's a little more daunting for households in the middle quintile, who earn an average of $41,500 a year — and Sanders wants them to pay an additional $4,500 in taxes. That's a huge tax increase. But they would get about $13,000 in benefits, which more than offsets the tax hike.

"We have never seen a proposal as progressive as Sanders' tax and transfer plan," TPC executive director Len Berman told reporters on a Monday phone call.

This sounds wonderful. Why aren't we all on board?

For many, Sanders's tax and spending plan will sound great. It puts more money in the pockets of just about everyone. The only people who don't come out with more money are the top 5 percent of taxpayers — and that group, on average, has adjusted gross income of $650,000.

If most Americans pay less and get a lot more, why isn't everyone on board?

The math doesn't work out.

The main problem is that the cost of these new benefits is way more expensive than the amount of money Sanders would bring in with his new taxes.

According to the Tax Policy Center, the tax plan would bring in an additional $15.3 trillion in revenue in the next decade. But the new benefits would cost a total of $33.3 trillion — a huge chunk of which is single-payer health care, at $29.1 trillion.

So how do we pay for something we can't raise money for?

Sarah Kliff has more on that here.

Another problem: Sanders's tax hikes scare voters

Sanders has spent the entire campaign trying to explain to voters that, under this system, they'll have more money in their pockets. But the one thing that still spooks voters is huge tax hikes.

We saw this firsthand when we published our tax calculator, which showed that even middle-class Americans will face huge tax hikes under Sanders's plan. For example, a single person earning $40,000 a year would have to pay an addition $4,000 in taxes. This scared a lot of people, even though they knew Sanders's plan would provide more government benefits.

Sanders has never come out and said that these tax hikes are huge. Instead, he's focused on the other side of the equation: His new spending programs will save Americans a lot of money.

And that is correct, according to the Tax Policy Center analysis. But this only matters in an election if voters understand how they'll save money.

That's why we polled voters on how much more in taxes they would be willing to pay for single-payer health care. We wanted people to think about how much they currently pay in health care costs, and put down an amount that is reasonably close (albeit less) than that cost.

But most voters, including Sanders supporters, weren't willing to pay more than $1,000, which is far less than people currently pay for health care — and less than most of them would have to pay under Sanders's tax plan. As many Sander supporters weren't shy to point out, these results would change if we just explained to them how much an average household pays in health care costs, and how much Sanders's plan would save them. But the point of the survey is that even Sanders's supporters don't quite know how the numbers work out.

If the revolution is going to happen in the future, there's a messaging problem to solve

It looks like Hillary Clinton has this nomination wrapped up.

But Sanders showed that young voters want a Democratic Party that looks more like him and less like Clinton. His success might be a harbinger of where the party will go to retain its base.

Sanders proposes a very different way Americans should pay for and receive social services — one that makes the government bear the responsibility, shifting it away from the private sector. But for this to happen, voters need to be okay with giving a lot more money to the federal government. In exchange, most Americans will get a lot more than they put in, as this analysis shows.

But Sanders's core message about income inequality doesn't play well when juxtaposed with huge tax increases, even if the big-picture message is consistent. And right now, even a self-proclaimed democratic socialist can't go in front of American voters and say that their taxes will go up by an average of 14 percent — though the next sentence explains that they will have an additional $4,200 in their pockets. On top of it all, if voters want everything Sanders promises, then they'll probably need to be okay with even larger tax increases that will save them less than the amounts we see in this study.

All that said, if this is the platform for the future Democratic party, explaining the chart at the top of this story will be crucial.

How candidates' tax plans could affect your wallet