Can we tax our way to “income equality”? Democrats appear to think so.
Massachusetts Senator Elizabeth Warren has been threatening the rich with a wealth tax since she came to the Senate. Now that Democrats have a nominal majority, she wants her fellow Democrats to take her proposal seriously.
Her idea is to place a 2 percent annual tax on households and trusts worth more between $50 million and $1 billion. There would also be a “surtax” on households and trusts worth more than $1 billion.
“They can afford it” is not an argument. It’s a political message. Sticking it to the rich has a long history on the left and it invariably comes a cropper when it meets reality.
“This is a wealth tax that has been needed for a long time. We need it to produce more revenue, to create more opportunity in American,” Warren said. “But it is a wealth tax that we particularly need because of the changes in this country under the pandemic. We have watched the wealth of the billionaire class in America increase by more than a trillion dollars over the last year.”
The reality is the stock market is responsible for almost all of that increase in wealth. If stocks had lost a trillion dollars would Warren advocate sending the super-rich money? No one would, of course, but measuring wealth by dollars and cents is the wrong way to look at it.
There are almost certainly very rich people whose wealth is tied up in their businesses. To say that someone’s net worth is $50 million is absurd. What are their assets? How is their income structured? Net worth is not the best yardstick to determine great wealth.
Warren has been a vocal supporter of a wealth tax for some time — making it one of her signature policy platforms on the campaign trail when she ran for president in 2020. “Two Cents” — referring to the 2-cent tax an ultrawealthy taxpayer would owe on each dollar — even adorned her campaign merchandise and was chanted at rallies. The bill is now one of her first moves as a new member of the Senate Finance Committee.
About 100,000 American families would be liable for the ultra-millionaire Tax, according to an analysis by economists from the University of California-Berkeley. They also estimated it would generate an estimated $3 trillion in revenue over 10 years without raising taxes on 99.95% of American households, which have a net worth below $50 million.
“Today the richest 1% own 75% of the nation’s wealth and the richest 0.1% — that’s zero-point-one percent — own more than 18% of America’s wealth,” said Jayapal. “Then just compare that to the entire bottom half of Americans owning just 1.5% of wealth.” Jayapal also noted the racial wealth gap with White families having an average wealth that is 14 times that of Black families and eight times as much as Hispanic families.
It’s a safe bet that a lot of that wealth will disappear before Warren’s tax people show up to collect it. The notion that her tax will bring in $3 trillion is giggle-worthy. Name one nation that imposed a wealth tax that returned more than a fraction of what was originally estimated?
Radicals know this but continue to pursue the rich because that’s where the money is. If they can’t find it there, they will suddenly discover that anyone with a net worth of over a million dollars is “super-rich” and deserves to be taxed extra.
Considering the grandiose spending schemes that Warren and her radical friends have cooked up, they’re going to need every penny they can get.