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Higher tax rates for the rich mean fewer Americans die each year, study suggests

Policies that lower taxes on the wealthy, on the other hand, would have the opposite effect and significantly increase the numbers of deaths in the U.S. each year, the study found.

Senate Majority Leader Mitch McConnell, accompanied by Sen. John Thune at left, speaking with reporters on Nov. 14.
REUTERS/Aaron P. Bernstein

Policies that raise taxes on the rich and redistribute that revenue to lower-income households would dramatically reduce the total number of Americans who die each year, according a study published this week in the journal Preventive Medicine.

Policies that lower taxes on the wealthy, on the other hand, would have the opposite effect and significantly increase the numbers of deaths in the U.S. each year, the study also found. 

With the U.S. Senate moving closer this week to voting on a tax proposal that would deliver massive tax cuts to the country’s wealthiest individuals and businesses, “it is critical that policymakers consider the potential public health implications of these tax reforms,” said Dr. Daniel Kim, the study’s author and an associate professor of health science at Northeastern University in Boston and the Paris Descartes University in France, in a released statement.

As Kim points out in his paper, the income gap between the rich and the poor in the U.S. has risen to levels not seen since the Great Depression. One of the major impacts of this economic disparity has been its detrimental effect on the overall health of Americans, primarily by increasing the proportion of people living in poverty, but also by increasing psychological stress and by eroding social cohesion. 

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In the U.S., people living on the lower end of the income scale also have less access to health care services, including those that help prevent disease.

Several scenarios

For his study, Kim compared current tax law with tax policies proposed by Sen. Bernie Sanders, I-Vermont, and President Donald Trump when they were candidates during the 2016 presidential election — proposals that represent both sides of the political spectrum. He also looked at two expanded versions of the Sanders proposal. One included a higher marginal tax rate of 75 percent for those with incomes above $500,000. (As Kim notes, that rate is “not without precedent.” The U.S. marginal tax rates were 70 percent or higher from 1964 to 1981 and 90 percent or higher from 1944 to 1963.) The other expanded version of the Sanders proposal combined the higher tax rate with a redistribution of tax revenue to lower-income households (those with after-tax annual incomes of $40,000 or less).

Using data from the Internal Revenue Service and research on how income (and income disparity) affects death rates, Kim projected that the Trump plan would increase inequality and lead to 29,689 more deaths per year from all causes, while the Sanders plan would decrease inequality and result in 31,302 fewer deaths per year.

The two modified Sanders plans would lead to even greater benefits. Kim estimated that under the expanded Sanders plan with the 75 percent top tax rate, 68,929 fewer Americans would die each year. That number jumps multifold, however, when the plan also includes a redistribution of resources. Kim projected that it would lead to a stunning 333,504 fewer deaths per year.

A critical time

“The take-home message from this study is that policies that both substantially raise federal income tax rates and redistribute tax revenue appear needed if we want to see big reductions in the total numbers of Americans that die each year,” said Kim. “Current tax proposals through the House and Senate fall well short of these top rates and do not include redistribution.” 

“At this critical time of tax reform, widening gaps between the rich and poor and growing public support for higher taxes and redistribution to combat inequality, policymakers should consider joint federal tax and redistributive policies to reduce the burden of mortality among Americans,” he added.

Here’s one final piece of background information from the study: In 2015, the top marginal tax rates in two Scandinavian countries, Sweden and Norway, were 59.7 percent and 47.2 percent, respectively, compared to 39.6 percent in the U.S. In 2015, Sweden was ranked ninth and Norway was ranked 13th globally for life expectancy. The United States was ranked 31st.

FMI: You can read the study in full on Preventive Medicine’s website.