Issues 2020: Progressive Proposals Prop Up the Professional Class

Proposals like free college, Medicare for All, and student debt forgiveness would disproportionately benefit high earners

NEW YORK, NY — Progressive candidates for the Democratic presidential nomination tend to argue that their proposals would benefit lower-income Americans by redistributing vast sums of upper-class wealth. A close examination of these proposals, however, shows that far more benefit would flow to higher earners, propped up in part by increased taxes on working Americans. In the latest from the Manhattan Institute’s Issues 2020 series, senior fellow Brian Riedl calculates that “free” public college, student loan forgiveness, and repealing the SALT deduction cap would funnel more than $1.5 trillion to top earners, while only $300 billion would benefit lower-income residents. Additionally, proposals like Medicare for All and a carbon tax would likely be a net cost for low-income families.

The key findings of the report include:

• Medicare for All would be a net cost for most of the 75 million Medicaid recipients because they already pay little to no health premiums and copays, but may be included in new taxes to fund the system.
• “Free” public college and student debt forgiveness would provide substantially more benefits to high-earning families than low-earning ones. Most Americans still do not complete college or accumulate student debt—and those who do land overwhelmingly in the top-earning two income quintiles.
• Regressive tax proposals like a value-added tax (VAT) and carbon tax would leave lower-income households paying disproportionately more of their income than wealthy families. Repealing the $10,000 cap on the SALT deduction would overwhelmingly benefit the richest one percent of earners.

Click here to read the full report.

About Issues 2020

The Issues 2020 series applies the Manhattan Institute’s breadth and depth of expertise on major issues of national public policy to the key arguments and proposals of the 2020 presidential campaigns. MI scholars identify where the central claims driving key debates reflect fundamental misunderstandings about what is happening in America. With succinct explanations of what the data show, they provide a much-needed corrective and a solid foundation for political debates about the nation’s future. Click here to read more.