Tom Steyer’s new plan to pay for the climate change fight

Ben Werschkul
DC Producer

Presidential candidate Tom Steyer is out with a new plan on Thursday for what he’s calling a Working Families Tax Cut. The plan includes measures, including tax cuts for low-income workers to tax hikes for the wealthy, to focus on his key priority: climate change.

In comparing his plans with those of Senators Bernie Sanders and Elizabeth Warren, the billionaire activist drew a stark contrast. "If you look at our climate plans, they're really dramatically different,” he said in an exclusive interview with Yahoo Finance.

Tom Steyer (left) was among the 6 candidates who qualified for the seventh Democratic presidential debate that was held in Des Moines on Tuesday. REUTERS/Shannon Stapleton

Sanders and Warren have backed plans for a Green New Deal. Steyer has based his campaign on climate change specifically: ”I would declare a state of emergency on day one. It's my top priority” he said. “I don't think either of them would do that.”

“If you compare the solutions that we come up with, sometimes they're the same but sometimes they're very, very different” he added. At the Democratic debate on Tuesday in Des Moines, Iowa, Steyer accidentally (and very memorably) came upon Warren and Sanders in the middle of a heated exchange just after the debate had ended.

"I don't want to get in the middle,” he said. ”I just want to say ‘hi Bernie’," he said on the audio published by CNN.

‘Rebalance the economy’

The plan’s goal is to “rebalance the economy,” said Steyer, who is proposing a 10% tax cut for working families making less than $250,000 a year. His plan will also increase tax credits through the earned income tax credit and the child tax credit. 

Democratic presidential candidate, investor Tom Steyer, one of seven scheduled Democratic candidates participating in a public education forum, makes opening remarks, Saturday, Dec. 14, 2019, in Pittsburgh. Topics at the event planned for discussion ranged from student services and special education to education equity and justice issues. (AP Photo/Keith Srakocic)

The cost of that tax cut would be offset by more taxes on rich people like him. Steyer, like Warren and Sanders, has campaigned on the idea of a wealth tax. He would begin with a 1% tax on Americans with a net worth over $32 million. Billionaires would pay 2% on their wealth each year.

Steyer – who Forbes pegs at having a net worth at $1.6 billion – would pay his own tax. “I don't think it will affect me at all,” Steyer told Yahoo Finance’s Rick Newman in an interview last fall. “I think I would go about my business in exactly the same way. It wouldn’t change my investment process, wouldn't change my thinking about anything.”

Steyer, in the plan, will reshape the tax code and add more of a burden on the richest taxpayers by bringing in additional revenue through reversing the Trump tax cuts and taxing unearned income the same. 

We have “a regressive tax code overall,” Steyer said during the interview, adding, “it's not just that we have a tax code that went from progressive to slightly regressive, we also have an income distribution. That's just gotten dramatically more unequal and unfair. I mean, it's hard to see.”

Paying for a plan to fight climate change

Steyer said this rebalance will, on net, bring in more money to the government. Where will that new money go? Infrastructure and fighting climate change.

The plan allocates $2 trillion over the coming decade for a transition to clean energy through upgrading and greening infrastructure. Steyer estimates the infusion of money will create 4.6 million long-term jobs.

Graphic by David Foster/Yahoo Finance

The climate plan also has a capitalist bent. Steyer said he can encourage trillions of dollars in new private capital investment as the green economy grows. A Steyer spokesperson noted that there are a number of elements in the plan to directly encourage private capital to get in the game, such as “matching and challenge grants, investments in small businesses, and R&D money, but mostly markets are leveraged by clear performance standards, which create a race to the top” to meet national standards.

“We're changing the rules of what the president can do,” Steyer said. “In terms of the ultimate impact on the economy, I think the private stuff is multiples of the public stuff.”

“I'm explicit about this. I believe in an innovative, competitive, dynamic private sector. I think it's an essential part of America's prosperity and growth,” he said. “But I am not someone who believes that markets are omnipotent.” His plan includes a mix of government rules that can harness the power of the market for good ends, he said.

“It's kind of like, in my mind, extremely intellectually sloppy and weak to think we'll just leave it into the market. Baloney!” he said.

The former hedge fund manager’s plan comes 18 days before the Iowa caucuses kick off the primary season. 

Steyer, unlike fellow billionaire candidate Michael Bloomberg, has invested heavily in a strong showing in the early primary states. His new plan makes sure to note just how much different types of people in the early states (“a minimum wage worker in Iowa,” for example) would save under his plan.

Steyer’s investment of over $100 million in advertising so far is starting to produce some results. He turned some heads, and qualified for the debate on Jan. 14, thanks to a second-place showing in a recent South Carolina poll. When it comes to national polling, he has been further back in the pack.

He was visiting Nevada on Thursday partly to discuss his new plan and will be crisscrossing the early states in the weeks ahead.

Ben Werschkul is the DC producer for Yahoo Finance.

Read more:

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How Tom Steyer went from finance to running against 'the corporate stranglehold'

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