Paul L. Caron

Sunday, November 24, 2019

NY Times: Raise Billions From Billionaires? Tax Experts Say It’s Not That Simple

New York Times, Raise Billions From Billionaires? Tax Experts Say It’s Not That Simple:

One of the signature initiatives of Elizabeth Warren’s presidential campaign is a wealth tax that, she says, would pay for many of the programs she proposes, like government-paid health care and free college tuition. Bernie Sanders, one of her opponents in the Democratic race, has proposed his own version of a wealth tax that would collect, according to estimates, about $4 trillion over a 10-year period, or $500 billion more than Senator Warren’s plan.

But here’s the big question: Would the proposals, elegant in theory, work in practice?

Lawyers and advisers to the wealthy say there is no way the wealth taxes would collect anything close to the estimates, and they cite ample evidence of taxes that are reduced or eliminated through extensive and sometimes aggressive strategies. ...

Gabriel Zucman, an economics professor at the University of California, Berkeley, who was one of the lead advisers on the Warren and Sanders wealth tax proposals, begs to differ. He said in an interview that he had solutions for many of the concerns and criticisms of the plans, including how to value private companies and illiquid assets. ...

Professor Zucman said a wealth tax would be different from other taxes that have been skirted. He envisions a way in which the Internal Revenue Service would prepopulate the tax return with an estimate of the person’s wealth.

Tax advisers disagree. The values in an estate tax return are almost always contested by the I.R.S.

Tax, Tax News | Permalink


"Oh and one other point about the ’86 Act."

aircav65: Personally I prefer this other point. In order to pass the 1986 Tax Reform Act, Reagan had to agree to a long-time liberal goal: equal taxes on income from wealth (capital gains and dividends) and income from work (wages and salaries). Unfortunately, this tax equality was given back not many years later by President Clinton. That's where we are today, and it's one of the main reasons for the huge inequality we see all around us.

Posted by: Gerald Scorse | Nov 24, 2019 1:53:44 PM

Oh sure, the IRS will take the employees currently underemployed and give them a random # generator to “estimate” the value of illiquid assets, like art, real estate, and privately held stock . And, they will have to “re-estimate” the value of the illiquid assets annually unless you are going to “assume” such values never change.
Also, currently there is no form requiring you to list the “value” of assets. Another minor back room detail to give to underemployed IRS agents.
I lived through the Regan tax cuts in the 1986 Tax Reform Act, which drove down personal income tax rates from 70% (unearned) and 50% (earned income.) The tax shelter industry was decimated and the # of law firm tax attorneys declined by half over the next 10 years or so. The point being – there is always a silver lining. Tax advisors, appraisers, et al will be back in high demand for years.
Oh and one other point about the ’86 Act. Economists noted that money moved from tax shelters where the returns were “artificial” since they mainly came from other taxpayers. Instead, shelter money moved to more rational (in economic terms) investments, which benefitted the entire economy.
But I shouldn’t interrupt “magical” thinking.

Posted by: aircav65 | Nov 24, 2019 10:00:38 AM