From CNBC: Sen. Elizabeth Warren, D-Mass., has proposed a “wealth tax” on some of the richest Americans. The new tax from Warren, who recently announced her bid to challenge President Donald Trump in 2020, would only apply to Americans with more than $50 million in assets. The Post reported that Warren has been advised by Saez and Gabriel Zucman, left-leaning economists affiliated with the University of California, Berkeley, on a deal that would levy a 2 percent wealth tax on Americans with $50 million-plus in assets. For Americans with assets above $1 billion, that tax rate would increase to 3 percent.The wealth tax is projected to apply to less than 0.1 percent of U.S. households, and would raise $2.75 trillion over 10 years, Saez said. Warren’s idea comes alongside other Democratic lawmakers’ plans to raise taxes on the wealthiest Americans to pay for ambitious policy goals, such as a “green new deal” that aims to reduce economic inequality and combat the causes of climate change.
THE ECONOMICS OF ENVY LEAD TO THE POLITICS OF ENVY: See how many examples of ENVY you can find in the next two paragraphs. Has anybody out there heard of Stalin and the Kulaks? When the socialist schemes of Joseph Stalin et al. foundered, they blamed the “kulaks,” i.e. those who had enjoyed the “unmerited accumulation of riches.” There was never any real definition of a “kulak.” Basically, if you had one cow and your neighbor had two, he was a kulak. Stalin announced the “liquidation of the kulaks as a class” as a necessary precondition for the progress of his program, which was, like Kamala Harris, “for the people.” “Dekulakization” was responsible for the deaths of about 5 million subjects of the workers’ paradise. This was necessary, the socialists argued, because the kulaks dominated the political party system (“for the rich, wealth begets power,” Zucman writes), because expropriating their wealth was necessary to fund benefits for the people (“The affluent,” Saez and Zucman write, “can contribute more to the public coffers. And given the revenue needs of the country, it is necessary”). Meanwhile, an adviser to Rep. Alexandria Ocasio-Cortez, AOC, has renamed his Twitter account, “Every Billionaire Is a Policy Failure,” and a former adviser to Senator Bernie Sanders has observed: “No one makes a billion dollars. You TAKE a billion dollars.”
Felicia Wong, of the “left-leaning” Roosevelt Institute: “(A wealth tax) is really about reducing concentrated economic and political power, which is very much in line with Senator Warren’s policy history. It also has real race implications, if you think about it: Wealth, which is passed on through generations, is a kind of crystalized history……...But the reason I focus so much on a wealth tax as reducing concentrated economic and political power, is I think this is where the new economics is really going: It’s a way to use taxation to drive a better economic dynamic. But there is no intellectual or policy defense for the system we have that allows this much “wealth-taking” and this much “extraction”. If enacted, this and other policies [like it] would really change the system, and change the country. Not just change the tax system, but change our politics, and change our democracy. I think that’s what we want.
Townhall: So, Warren and Cortez would force Mr. Bezos to sell his Amazon shares to pay his wealth tax. In selling his shares, he would pay the 85% federal income and state taxes on the gain to obtain the $3.95 billion wealth tax. His sales price of $23.23 billion at today’s prices would require a sale of almost 20% of his shares in Amazon. With an annual wealth tax, he would be required to annually sell 20% of his Amazon shares until he was no longer a billionaire. So, in essence, the combined Warren/Cortez plan would annually take away almost 20% of Mr. Bezos’s assets in taxes as he sold stock to pay the wealth tax.In just a few short years, the combination of the 70% income tax and the 3% wealth tax would confiscate most of his wealth. And this brings us to Margaret Thatcher who said: “The trouble with socialism is eventually you run out of other people’s money.” The numbers for Mr. Bezos only tell a small portion of the story. There probably is no market for that many Amazon shares annually and the price would likely collapse hurting every pension fund in the United Sates and creating pension issues for one and all. At Amazon, jobs would clearly be lost if dividends were paid as cash for employee salaries would be lost. The results would be the same for every tech entrepreneur, Gates, Zuckerberg, Ellison. Ibid Buffet. The values of these companies would be severely impacted, the investors, mutual funds and pensions would be slaughtered. And after a few years, the money would dry up.
Bloomberg has a much more considered take: Other than stockholders of publicly traded corporation, most of the personal wealth in the United States is the result of pass-through entities, the bulk of which are privately held Examples are sole proprietors, LLC’s, partnerships and S-corporations. 93 % of those owners are actively engaged in the operations of their businesses. These owners saw their income peak in their 50’s, matching the peak earning years for high-salaried professionals; in contrast, landlords, bondholders and other idle owners of capital usually see their peak earnings at age 70. This suggests that the capital income of pass-through owners is really compensation for their work, which is concentrated in professional services, especially legal services. Moreover, pass-through companies that have the highest-earning owners also have the highest profits per worker. This suggests that owner-managers are effectively being compensated for better performance. Rising inequality is quite real — but maybe it’s the result of ever higher compensation for superstar entrepreneurs and skilled professionals, not of outsized gains to idle capitalists. Nor is the stage being set for an oligarchical takeover. When these owners die or retire, the incomes they were earning are not passed on to their heirs. Just as important, 91 percent of the entrepreneurs in the top 1 percent had parents who were not in the top 1 percent. Rising inequality in America is a serious concern. But the main cause is a shortage of highly skilled professionals and entrepreneurs. The goal should be to solve that problem, ideally by making it easier for people to get advanced degrees and start new businesses. The goal should not be to soak the rich.
Even the Washington Post, whom you know is one of my prime examples of media progressive bias, had an editorial against her proposal, criticizing it as campaign rhetoric with no realistic hope of passing or implementation.