by John Hawkins | October 12, 2019 10:02 pm
The Democrat front runner Elizabeth Warren has a lot of bad ideas. Fortunately, most of them, like decriminalizing crossing the border illegally or making assault rifles illegal will have legions of people who refute them. But, her wealth tax is a little different. After all, when you start talking about putting a 2% wealth tax on all wealth over 50 million dollars and a 3% tax on wealth over a billion dollars, it’s hard to feel sorry for the people targeted. No one is crying tears over the idea of people like Warren Buffet, Barbra Streisand, Oprah Winfrey, Michael Bloomberg, and Mark Zuckerberg having a massive new tax bill every year.
Elizabeth Warren is also promising that her wealth tax would raise 2.75 trillion dollars over the next decade. Of course, we all know there is absolutely no chance it will ever raise that much money. Why? Well, for one thing, remember Warren Buffet, Barbra Streisand, Oprah Winfrey, Michael Bloomberg, and Mark Zuckerberg? People like that have an awful lot of pull with Democrats and to fight a tax like this, it would make sense for the wealthy to cumulatively spend billions on political donations and lobbyists that would ensure that there are loopholes in the law. Just as an example of how that has worked in the past, you have probably heard some nostalgic liberal say that the income tax on the highest earners in the U.S. used to be 94%. But, in actuality, the wealthiest Americans were paying about 40% of their income under that 94% tax rate. If anything, a wealth tax would have even more potential loopholes given that the value of everything the wealthiest Americans own would have to be appraised every year. Imagine how that’s going to work out as they pay the best lawyers and accountants on earth to fight with the IRS about the value of their homes, trusts, art, cars, furniture, boats and every other thing under the sun. Incidentally, the difficulty of administering this tax and the much smaller than anticipated revenue that it has brought in is a big part of why in Europe, Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, the Netherlands, Luxembourg, and Sweden have all tried and abandoned wealth taxes.
The other thing we have seen over and over is that new taxes change behavior. Money that’s paid to the government can’t be used to invest in new businesses, research, and development or the stock market. That would hurt the economy. Currently, the U.S. is one of the world’s top destinations for millionaires to move to, but this sort of tax would encourage some of those people to move elsewhere. We would even see couples divorcing and money being spread across whole families to try to beat the government out of the wealth tax.
You can read it all at BizPac Review.
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