United States Senator Elizabeth Warren (D-Mass.) today unveiled the Ultra-Millionaire Tax, a bold proposal to tax the wealth of the richest 0.1% of Americans. The legislation, which applies only to households with a net worth of $50 million or more, is estimated by leading economists to raise $2.75 trillion in tax revenue over a ten-year period.
For decades, a small group of families has raked in a massive amount of the wealth American workers have produced, while America’s middle class has been hollowed out. The result is an extreme concentration of wealth not seen in any other leading economy.
The Ultra-Millionaire Tax taxes the wealth of the richest Americans. It applies only to households with a net worth of $50 million or more-roughly the wealthiest 75,000 households, or the top 0.1%. Households would pay an annual 2% tax on every dollar of net worth above $50 million and a 3% tax on every dollar of net worth above $1 billion. Because wealth is so concentrated, Saez and Zucman project that this small tax on roughly 75,000 households will bring in $2.75 trillion in revenue over a ten-year period.
As she seeks the 2020 presidential nomination of the Democratic party, Sen. Elizabeth Warren is giving voters fair warning that she does not accept the Constitution’s limits on federal power. On Thursday the former Harvard law professor unveiled a plan to extract wealth from the country’s wealthiest citizens.
The “leading economists” cited by Team Warren are Emmanuel Saez and Gabriel Zucman from the University of California-Berkeley.
No doubt many economists will also explain in the days to come why the Warren tax would not raise as much as Messrs. Saez and Zucman expect and how it would distort investment and encourage capital flight from the United States. Ms. Warren implicitly acknowledges this last problem. Her plan includes “a significant increase in the IRS enforcement budget” and “a 40% ‘exit tax’ on the net worth above $50 million of any U.S. citizen who renounces their citizenship.”
There are excellent economic arguments against this new tax plan. But today this column would like to focus on the illegality of the Warren scheme. Ms. Warren seems to understand this problem as well. Typically lawmakers announcing new legislation don’t feel the need to simultaneously try to rebut anticipated claims that the bill is unconstitutional. But the Warren press release links to two letters on the subject, each signed by various law professors at famous universities.
No matter how many academics she persuades to sign on to this ideological project, the plain fact is that the founders specifically prohibited such a tax. A well-informed reader notes: The 16th Amendment authorizes Congress to tax “incomes, from whatever source derived.” It does not give Congress the power to tax balance sheets as well.
Voters can choose to believe that Ms. Warren’s wealth tax would only hit those with enormous wealth. But given the damage she intends to wreak on constitutional limited government, why should they?
She proposes spending $1 trillion to save the planet. Others more realistically estimate the cost of her plan at $40 trillion.
Medicare for all will cost on the order of $32 trillion.
So in addition to the wealth tax being unconstitutional, it will soon have to pay for all sorts of crazy ideas that will go far beyond confiscating ALL the wealth of anyone who has anything.
Mike "Mish" Shedlock
If people like AOC, Beto, Warren and their ilk continue to be elected, everyone in this country will soon have a net worth of at least $50 million.
The constitution never stopped the ACA, when the Supreme Court rewrites law. Maybe when RGB is out someone who respects law will enter (doubtful). That said a wealth tax is a bad idea, my guess is a VAT tax is going to be on the table soon.
As for the Medicare for all, a joke. But I would be for ”Medicare prices for all at any institute that accepts gov payments”. This would reduce the BS price games and drop prices by 50-700% (I looked up my actual bills vs CPT codes and that is real). Plus all private practices would still be able to set their own price, but they too would drop.
I'd suppose that EW's net worth is $49,999,995.00
They could do a bigger death tax. Just takes longer. I gave up on the Libertarian party in part because excessive centralization of wealth undermines all freedoms and the Bill of Rights. Rich people can buy (lease?) Congress. Equality under the law becomes a delusion.
There's that liberal Mish again promoting liberal ideas
She never has said anything about creating and preserving wealth, but then again, she's works for an organization that has been on a wealth destruction path for decades.
The Democrats were surprised by how quickly Bernie moved the Overton window in 2016 - they are now moving it back to the pre-Clinton days. All the Clinton haters are going to grow up once Fox News etc. stop mainlining them with anti-Hillary nonsense and realize that the Clintons were the best friend in the Democratic Party the right wing ever had.
Also, don't get your knickers in a twist so quickly Mish, "outrageous" statements at the beginning of a long political campaign are a way of trying to be in the "recognized contenders" group. If you really are concerned about Warren, don't rile up the crazies like this. You are helping her.
Now, now Mish, Elizabeth, like all demagogues, is simply going with what seems to be working. For Hitler, it was Jews and Gypsies. For Elizabeth, it's the wealthy.
Well, you can change the Constitution, right? That is how women and black people ended up voting...
If you accept that we are in the middle of another industrial revolution in the form of robotics then her proposal is not without merit. Automated manufacturing will displace millions and million from work onto the dole queue. When you consider what the social effects and implications are then taxing the ultra-rich may not be so bad a compromise after all.
The uber wealthy will simply leave and take their wealth with them
Things like wealth taxes address the symptom, not the cause. We do have a yawning wealth gap in the US (and in the West in general) because of out of control bankers. The cause is QE, ZIRP, bailouts, incentives to hollow out companies rather than build, etc. Reining in this corruption is the only effective way to deal with rampant inequality, but we all know that's not going to happen.
Eventually Gilets Jaunes will spread throughout the West, but it should have happened a decade ago.
The US already has a wealth tax: printing money. Calling the printed money a "loan" is just a convenient fiction. It's never paid back.
When you print dollars, every dollar and every bit of dollar-tied "wealth" is diluted. Taxed.
Where, who, and what is that "wealth"? I'd go with young people being the "rich". Wealth is in their bodies. Dwarfs the chump change old (AKA, the "rich") people have saved.
Interesting thought experiment: How much would a rich 80 year old with 50 million dollars pay for their 20 year old body?
Interesting thought experiment: What if a country eliminates all taxes and just prints the money their government spends?
No one should be rich enough to buy a presidency or standing in any political institution. An economic system that promotes wealth disparity is broken and unsustainable.
US democratic freedom, capitalism and the anarchistic ideal of small government has achieved little except global economic and environmental corruption. That's because constitutions written by elite establishments, which inevitably favor wealth and power are destined to continually fail; because they overlook the needs of the whole economic organism
A government that invites participation from an independent middle class (society's majority) would work better. Replacing the senate or upper house with a jury-of-peers chosen randomly from the qualified working-class community to audit government activity, is one way to stem the inevitable corruption and establishment clientelism that prevails in modern political administrations.
Or we can just keep going through repeated periods of poverty, revolution and political decline in which everyone suffers... at least until the planet finally dies.
I have read Warren scholars' dissertations on the legality of the wealth tax. They sound very much like John Yoo's dissertations on the legality of torture written for George W. Bush.
The concentration of wealth and its transfer through inheritance leads to financial instability and erodes democracy. Massive taxes curtail the ability to innovate and improve society. One solution that attempts to resolve the good and bad of capitalism is to fund Social Security and welfare with a very high death tax. The current system holds back the youth by forcing them to pay for the social debts their parent's generation incurred.
Hollowing out of the middle class and economic destruction of the working class has been enabled by massive illegal immigration which has stagnated and lowered wages of tens of millions of Americans.
However Warren is all for open borders and continued massive illegal immigration.
Warren is a leftist-hypocrite in addition to being economically incompetent and being a fantasist liar with her Indian background.
This person took a place from some deserving real American-Indian or African-American because Warren was hired because universities where she worked wanted to increase diversity and even touted her diversity after hiring her despite now claiming that Warren was hired for her talents after Warren's diversity charade was proven to be a 1/1024th LIE.
Instead of confiscating money from the rich the correct way to fight inequality would be to force corporations to pay better wages through working of open markets by stopping further illegal immigration and deporting the 29.5 million illegal immigrants currently in USA (MIT-Yale study).
With no illegals to lower wages companies would be forced through market forces to pay higher wages.
Ignoring whether or not it's a good idea, why would a wealth tax be unconstitutional? Estate taxes are constitutional, and a wealth tax basically a while still alive estate tax.
Ehhh, let the U.S. collapse unto itself when the debt can no longer be increased, however that may work, the rich can run off to New Zealand like they planned. I don't care about Warren or any of them. When or if we get another recession the job cuts will be so deep as they usually are, we won't know wtf hit us. The youth I know aren't even considering saving for retirement anymore, the only ones who are - are the immigrants who know they can make enough here in about 5 years to go back home and have something, being that they don't have the government overhead to take it all away, us permanent residents will just stay broke paying taxes and health care costs, and yeah that's the only good reason to increase wages, so the states and corporations can just suck it back in.
These 75,000 wealthy families will by tomorrow night have advice from their accountants and financial advisors what measures to take to either avoid this theft or at least to minimize its affect and the options are vast . The odds of Warren becoming President are remote but these people do not take chances . When completed these measures will probably cut down the tax to be paid by 50 -75% and will be very bad news for the US economy .