Socialist Democratic presidential candidate Sen. Bernie Sanders has debuted a wealth tax that would tax the rich at rates reportedly as much as quadruple those demanded by fellow 2020 contender Sen. Elizabeth Warren’s original wealth tax.
Whereas Warren’s plan would slap a two percent annual tax on a net worth above $50 million and three percent annual tax on a net worth above $1 million, Sanders’ far more draconian plan calls for taxing the wealthy at rates as high as eight percent.
And whereas the estimated $2.75 trillion that would be raised by Warren’s plan would be used to raise the American people’s children and proffer reparations to gays and blacks, the estimated $4.35 billion that would be raised by Sanders’ plan would be used to pay for Medicare-for-All, universal childcare, and affordable housing.
It’d also be used to effectively eliminate the existence of billionaires:
Billionaires should not exist. https://t.co/hgR6CeFvLa
— Bernie Sanders (@BernieSanders) September 24, 2019
There should be no billionaires. We are going to tax their extreme wealth and invest in working people. Read the plan: https://t.co/RJDLvX5H4c
— Bernie Sanders (@BernieSanders) September 24, 2019
“Under this plan, the wealth of billionaires would be cut in half over 15 years which would substantially break up the concentration of wealth and power of this small, privileged class,” the plan reads.
“In order to reduce the outrageous level of inequality that exists in America today and to rebuild the disappearing middle class, the time has come for the United States to establish an annual tax on the extreme wealth of the top 0.1 percent of U.S. households,” it continues.
“This wealth tax would only apply to net worth of over $32 million and would raise an estimated $4.35 trillion over the next decade. Anyone who has a net worth of less than $32 million would not see their taxes go up at all under this plan.”
Below is a chart depicting the plan’s rates:
- 1% tax for a net worth above $32 million
- 2% tax for a net worth between $50 million and $250 million
- 3% tax for a net worth between $250 million and $500 million
- 4% tax for a net worth between $500 million and $1 billion
- 5% tax for a net worth between $1 billion and $2.5 billion
- 6% tax for a net worth between $2.5 billion and $5 billion
- 7% tax for a net worth between $5 billion and $10 billion
- 8% tax for a net worth above $10 billion
The brackets would reportedly be cut in half for single taxpayers.
While Sanders neglected to mention any of these in his grandiose proposal, the idea suffers from a litany of problems that would cripple its execution and make its end goal virtually impossible.
One problem with the plan — besides the fact that it would apply to what a taxpayer already owns versus what he or she earned — is that the revenue it’d allegedly raise over the course of 10 years would only fund 14.5 percent to 10.8 percent of his Medicare-for-All proposal. And the evidence of this is Sanders’ own words, ironically enough.
“Somewhere between 30 and 40 trillion over a 10-year period,” he openly admitted when asked during a forum hosted by The Washington Post just two months ago about his plan’s costs.
(Source: The Washington Post)
Another problem with the proposal is that it would likely cost an inordinate amount of money just to administer a wealth tax. Why? Because of the complexities inherent in it.
“The uber wealthy tend to have very hard-to-value assets,” 81-year-old Tax Foundation think tank noted in a critique earlier this year of Warren’s less-ambitious proposal.
“They own more than publicly-traded stock, such as real estate holdings, trusts, and business ownership interests. It is difficult to value these assets on an ongoing basis. Imagine a large privately-held company — its value could change almost daily. How would the tax handle these fluctuations?”
Through a lot of expensive bureaucracy, no doubt.
And then there’s the fact that the $4.35 billion revenue estimate is highly generous and unrealistic. Why? Because the rich are extraordinarily skilled at reducing their tax requirements.
“Politically expedient or economically necessary carve-outs and loopholes will also reduce the revenue one can expect a wealth tax to generate, says Chris Edwards, a tax policy scholar with the Cato Institute,” Reason magazine notes.
“If they were passed into law there would be all kinds of exemptions and exceptions like farmland. Rich people would move their wealth to those exempted areas and the government wouldn’t raise that much money,” Edwards said to the magazine.
“This, adds Edwards, is exactly what happened in the 12 European countries that adopted wealth taxes,” Reason’s report continues. “Revenue was disappointing, raking in on average about .2 percent of GDP. In the U.S. context that would work out to be a little under $40 billion a year, or about 10 percent of what Sanders is claiming his wealth tax will generate.”
But the most troubling potential side effect of Sanders’ proposal is the calamitous damage it could engender to the economy and the millions of working class Americans who make it run.
“The left-wingers have this idea that most wealth is gold bars underneath the mattresses of rich people,” Edwards said to Reason. “Most wealth is actually active business assets. It’s the value of the assets that are actively producing and employing people in production.”
Therefore, a tax on these “active business assets” would be funneled right back to the middle class via fewer jobs, lower wages and less opportunity for all.
Like social media critics have pointed out, the plan would be a “track wreck” for America and its 320+ million inhabitants:
Awesome, just chase all the Billionaires, there money, there jobs, there investments out of america…now if that’s not a dumbass strategy I don’t know what is. @BernieSanders would be a train wreck for our country. https://t.co/KlinHeKnrK
— ?? STATE ⭐ OF ⭐ US ⭐ All ?? (@StateOUAll) September 25, 2019
And then there will be no jobs and the middle class will be gone. How long will the American people allow you to destroy America?
— No name (@MyAmerica101) September 24, 2019
Nit wit! Want to destroy the American entrepreneurial spirit… billionaires are invested in companies that create jobs, opportunities and inspiration…
— Augusto (@ABU24) September 24, 2019
YOU will destroy the World Economy beginning with the United States.
A huge World Wide economic Decline will take place.
The Billionaires you are targeting will Not be harmed.
America will look like Venezuela!
— Jeff Harper (@harperjeff30) September 24, 2019