Elizabeth Warren’s crusade against rich people is even worse than we thought. According to Richard Rubin of the Wall Street Journal, some millionaires and billionaires would experience tax rates of over 100 percent on investments under Warren’s proposals.
Potential tax rates over 100% could result from the combination of tax increases the Massachusetts senator proposes for the very top tier of investors. She wants to return the top income-tax rate to 39.6% from 37%, impose a new 14.8% tax for Social Security, add an annual tax of up to 6% on accumulated wealth and require rich investors to pay capital-gains taxes at the same rates as other income even if they don’t sell their assets.
Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.
The rate would vary according to the investor’s circumstances, any state taxes, the profitability of his investments and as-yet-unspecified policy details, but tax rates of over 100% on investment income would be typical, especially for billionaires.
Warren has promised free healthcare, childcare, housing, and education, amongst other things, and has promised to do so without raising taxes on the middle class. Her plan to pay for Medicare for All without raising taxes on the middle class can’t even be done, and that’s just one proposal. Warren’s plans to pay for all of her proposals are clearly more radical than she wants us to believe. “Under current law, investors without dividends can add their annual gains to their fortunes and pay little or no income tax,” Rubin explains. “After Ms. Warren’s one-two punch, some billionaires who generate pretax returns could pay annual taxes that would leave them with less money than they started with.”
“That isn’t an unintended consequence,” Rubin added. “For progressive-tax advocates, breaking up concentrated wealth is a goal.”