Tax the rich. Tax the rich. Just take it. That is the message from progressives.
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?
Just a Start
I estimated the cost of that to be about $2.4 trillion a year.
Wealth in Wrong Hands
New Green Deal
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