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Wealth tax: Elizabeth Warren proposes hike on 'ultra-millionaires'

  

Category:  News & Politics

Via:  john-russell  •  3 years ago  •  16 comments

By:   Tami Luhby (MSN)

Wealth tax: Elizabeth Warren proposes hike on 'ultra-millionaires'
"As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate," Warren said in a statement. "This is money that should be invested in child care and early education, K-12, infrastructure, all of which are priorities of President Biden and Democrats in Congress."

S E E D E D   C O N T E N T



Massachusetts Sen. Elizabeth Warren, Washington Rep. Pramila Jayapal and Pennsylvania Rep. Brendan Boyle want the ultra-wealthy to pay for it.

The three Democrats unveiled the Ultra-Millionaire Tax Act on Monday morning. It would levy a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion as well as a 1% annual surtax on assets above $1 billion, for a 3% tax overall on billionaires.

The controversial proposal, which is co-sponsored by Vermont Sen. Bernie Sanders and others, is similar to the one Warren pitched in 2019 as a Democratic primary candidate. Taxing the rich served as a primary way for Warren and Sanders to fund their plans to expand health coverage, child care and other proposals when they were vying for the primary nomination.

"As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate," Warren said in a statement. "This is money that should be invested in child care and early education, K-12, infrastructure, all of which are priorities of President Biden and Democrats in Congress."

About 100,000 American families would be subject to the tax, which would raise around $3 trillion over a decade, according to an analysis provided by the lawmakers. It was conducted by University of California Berkeley Professors Emmanuel Saez and Gabriel Zucman, who are well-known for their left-leaning work on income and wealth inequality.

The revenue estimate is higher than the one with which they provided Warren during the campaign in part because the wealth at the top, particularly among billionaires, has grown over the past two years and is expected to continue increasing, they said. Two years ago, they estimated it would raise $2.75 trillion over a decade and affect 75,000 households.

Though the coronavirus triggered a steep economic downturn in the US, it has had a very disparate impact on American families. Higher-income households have largely kept their jobs through telecommuting, and stock market gains have increased their net worth. Those at the opposite end of the scale have been hit disproportionately by layoffs and have had a harder time find new jobs during the so-called "K-shaped" recovery.

Taxing wealth, however, could be very difficult to do. There are questions about whether it is permitted by the US Constitution, with legal scholars falling on both sides of the argument.

Also, wealth taxes can be tough to administer since the rich often have assets that are hard to value.

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JohnRussell
Professor Principal
1  seeder  JohnRussell    3 years ago

Although this is an entirely worthy idea, both logical and needed, the truth is such "radical" ideas as taxing wealth (other countries have taxed wealth throughout history dating back to the ancient world) such a proposal would need pretty broad support before Congress would consider it and the democrats would need more than a one vote margin in the Senate. 

 
 
 
Vic Eldred
Professor Principal
1.1  Vic Eldred  replied to  JohnRussell @1    3 years ago

I'm sure the dems could get some Republicans to go along provided this wealth tax would prevent any and all tax increases on the middle class. No sneaky taxes on the middle class either, such as a "gasoline tax or an estate tax!"

 
 
 
Snuffy
Professor Participates
1.1.1  Snuffy  replied to  Vic Eldred @1.1    3 years ago

Wouldn't it also have to get past SCOTUS?  Like so many things constitutional,  you can find "experts" who will defend either side of the question.  I'm confident that if passed it would be challenged in court and end up in front of SCOTUS eventually. 

 
 
 
Vic Eldred
Professor Principal
1.1.2  Vic Eldred  replied to  Snuffy @1.1.1    3 years ago

What section of the Constitution prevents the congress from passing a "wealth tax?"

 
 
 
Snuffy
Professor Participates
1.1.3  Snuffy  replied to  Vic Eldred @1.1.2    3 years ago

A wealth tax is a direct tax which needs to be apportioned. There is precedent with SCOTUS on income tax vs wealth tax.

Thus, in the matter of taxation, the Constitution recognizes the two great classes of direct and indirect taxes, and lays down two rules by which their imposition must be governed, namely: the rule of apportionment as to direct taxes, and the rule of uniformity as to duties, imposts and excises.

The 16th Amendment applied to Income Tax

Thus, in the matter of taxation, the Constitution recognizes the two great classes of direct and indirect taxes, and lays down two rules by which their imposition must be governed, namely: the rule of apportionment as to direct taxes, and the rule of uniformity as to duties, imposts and excises.

The above listed Forbes article came out early in the 2020 election when Warren pushed her ideas on a wealth tax. I'll admit I'm not a constitutional expert and must rely on others for such knowledge but it does seem there is precedent against a wealth tax in this country that would need to be settled. A wealth tax would not impact me directly as my wealth is not that great, but I believe there would be indirect impacts to everybody if this were to pass.  

 
 
 
Ozzwald
Professor Quiet
1.1.4  Ozzwald  replied to  Vic Eldred @1.1    3 years ago
I'm sure the dems could get some Republicans to go along provided this wealth tax would prevent any and all tax increases on the middle class.

I feel a little dirty saying it, but I agree with you.  

I do not agree with a wealth taxes, just for the sake of a wealth tax.  But for this economy to recover, both small and middle sized businesses need help, as well as poverty and middle class people. 

Taxes have been skewed for years to give the wealthy more tax breaks, allowing them to accrue wealth to an unheard of degree, it is time for them to help out the rest of the country at its time of need.

 
 
 
Vic Eldred
Professor Principal
1.1.5  Vic Eldred  replied to  Snuffy @1.1.3    3 years ago
but it does seem there is precedent against a wealth tax in this country that would need to be settled.

You may have a point with the rule on uniformity. It would seem that a "wealth tax" (as it is known in Socialist nations) is like a double tax, on money that has already been taxed when it was earned.

 
 
 
Vic Eldred
Professor Principal
1.1.6  Vic Eldred  replied to  Ozzwald @1.1.4    3 years ago

I have no empathy whatsoever for those currently considered the 1%.

 
 
 
Ozzwald
Professor Quiet
1.1.7  Ozzwald  replied to  Vic Eldred @1.1.6    3 years ago
I have no empathy whatsoever for those currently considered the 1%.

That's good, because very very few of them have any empathy for the rest of us.

 
 
 
Greg Jones
Professor Participates
1.2  Greg Jones  replied to  JohnRussell @1    3 years ago

No, it's a dumb idea that would raise nowhere near the amounts that the idealistic Dems envision.

 
 
 
JohnRussell
Professor Principal
2  seeder  JohnRussell    3 years ago
UC Berkeley economist Gabriel Zucman, whose  research  helped put wealth inequality back on the American policy agenda, played a part in designing Warren's wealth tax. He says it was designed explicitly with European failures in mind.

He argues the Warren plan is "very different than any wealth tax that has existed anywhere in the world." Unlike in the European Union, it's impossible to freely move to another country or state to escape national taxes. Existing U.S. law also taxes citizens wherever they are, so even if they do sail to a tax haven in the Caribbean, they're still on the hook. On top of that, Warren's plan includes an " exit tax ," which would confiscate 40 percent of all a person's wealth over $50 million if they renounce their citizenship.

Warren's tax is also only limited to the super rich, whereas in Europe the threshold was low enough to also hit the sort-of rich. This higher threshold helps it avoid problems like someone having a family business that makes them look rich on paper but, in fact, they're short on the cash needed to pay the tax.

Also important, Zucman argues, the higher threshold means only a small group will be affected. And smaller groups have a harder time fighting for exemptions, which hurt European efforts. Some countries, for example,  exempted artwork and antiques  on the grounds they were hard to value. It's true, but it creates a huge loophole: Buy lots of art! Economists hate incentives like these because they distort markets. Warren's proposal calls for no exemptions.

If a Wealth Tax is Such a Good Idea, Why Did Europe Kill Theirs? : Planet Money : NPR
 
 
 
Bob Nelson
Professor Guide
3  Bob Nelson    3 years ago

This is a no-brainer.

About 100,000 American families would be subject to the tax, which would raise around $3 trillion over a decade, according to an analysis provided by the lawmakers. 

So a relatively painless tax - two or three percent is peanuts for the ultra-rich - would raise a trillion dollars over a decade. That would roughly compensate Trump's tax gift to the ultra-rich.

My opinion is... to double it!

 
 
 
JohnRussell
Professor Principal
3.1  seeder  JohnRussell  replied to  Bob Nelson @3    3 years ago
would raise a trillion dollars over a decade.

the article says three trillion over a decade. still peanuts on a grand scale perhaps, but you gotta start somewhere. 

 
 
 
Texan1211
Professor Principal
4  Texan1211    3 years ago

Well of COURSE Warren and Sanders would be the ones proposing and supporting such nonsense.

Got to get the money for some of their social spending cravings!

 
 
 
JohnRussell
Professor Principal
4.1  seeder  JohnRussell  replied to  Texan1211 @4    3 years ago

what a wealth tax does is require those who have benefited most from the American system to give something back.  Nothing wrong with the concept at all. 

 
 
 
Texan1211
Professor Principal
4.1.1  Texan1211  replied to  JohnRussell @4.1    3 years ago

The wealthy already "give back", in fact, they pay the lion's share of income taxes collected.

Warren and Sanders can try to fleece them all they want, but I doubt SCOTUS will look favorably on their scheme to finance their pet projects.

 
 

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