Thursday, September 5, 2019
Reuven Avi-Yonah (Michigan), The Shaky Case Against Wealth Taxation:
Ever since Senator Elizabeth Warren (D-MA) introduced her proposed wealth tax, there has been a storm of criticism against it not just from predictable sources like the Tax Foundation or Fortune magazine, but also from Democrats like former Secretary of the Treasury Larry Summers. This criticism is misguided and should not prevent other Democrats from supporting Senator Warren’s proposal.
Under Warren’s wealth tax plan, the richest 75,000 American households would pay an annual 2 percent tax on all assets—net worth—above $50 million, and a 3 percent tax on every dollar of net worth above $1 billion. University of California, Berkeley, economists Gabriel Zucman and Emmanuel Saez, who study wealth inequality, say Warren’s tax would raise around $2.75 trillion over ten years. The revenue would be used to fund, among other things, universal child care for every child age zero to five, free tuition and fees for all public colleges, and forgiveness of 95 percent of student debt.
There are four major lines of criticism of the Warren proposal, and they are all wrong. ...
The income tax was adopted over a century ago because state property taxes could not reach intangible assets like stocks and bonds, and federal consumption taxes (tariffs) were regressive. Today, we have the means to tax the super-rich on these assets, and it is high time we did so, especially when faced with inequality that rivals the Gilded Age and a president who cuts taxes on the rich and imposes tariffs on the poor. Senator Warren’s plan should be adopted, even if it fails to tax those Rembrandts.
Prior TaxProf Blog coverage:
- Bruce Ackerman (Yale), Anne Alstott (Yale), Phililip Bobbitt (Columbia), Jon Michaels (UCLA), Aziz Huq (Chicago), Bernice Greenberg (Chicago) & Robert Tsai (American), Letter to Elizabeth Warren
- David Gamage (Indiana), Five Key Research Findings on Wealth Taxation for the Super Rich
- Daniel Hemel (Chicago), Elizabeth Warren’s Wealth Tax On The Super-Rich Is The Wrong Solution To The Right Problem
- Dawn Johnsen (Indiana) & Walter E. Dellinger III (Duke), The Constitutionality of a National Wealth Tax, 93 Ind. L.J. 111 (2018) (reviewed by Michelle Layser (Illinois) here)
- Ari Glogower (Ohio State), A Constitutional Wealth Tax, 118 Mich. L. Rev. ___ (2019)
- Paul Krugman (New York Times), Elizabeth Warren Does Teddy Roosevelt
- Emmanuel Saez (UC-Berkeley) & Gabriel Zucman (UC-Berkeley), Letter to Elizabeth Warren
- Michael Simkovic (USC), After Paying Elizabeth Warren's Ultra-High Net Worth Wealth Tax, How Much Would Billionaires Have Left To Live On?
- Michael Simkovic (USC), Billionaire Taxes
- Monica Victor (S.J.D. 2019, Florida), Elizabeth Warren’s Wealth Tax Will Aggravate Global Inequality
- Wall Street Journal, The Trouble With Taxing Wealth: