Paul L. Caron

Tuesday, December 24, 2019

Wharton: Elizabeth Warren’s Wealth Tax Is Too Optimistic

Following up on my previous posts (links below):  Knowledge@Wharton, Is Elizabeth Warren’s Wealth Tax Proposal Too Optimistic?:

WhartonAn “ultra-millionaire tax” — or wealth tax — proposed by Democratic presidential candidate Elizabeth Warren is likely to raise between $2.3 trillion and $2.7 trillion in additional revenue in ten years from 2021 to 2030, according to a study by the Penn Wharton Budget Model, a nonpartisan research initiative that analyzes the fiscal impact of public policy programs. These revenue projections are significantly lower than Warren’s estimate that the plan can potentially generate $3.75 trillion. Moreover, the wealth tax may depress GDP in 2050 by 1% to 2%, depending on how the money is spent and the productivity boost it generates, the study adds.

Warren last month announced a revision of her earlier wealth tax proposal of January 2019, doubling the levy on households with more than a billion dollars in net worth. Under her plan, households would pay an annual 2% tax on every dollar of net worth exceeding $50 million and a 6% tax on net worth more than $1 billion. The tax would impact some 75,000 households who comprise the top 0.1% of U.S. households, according to analysis by economists Emmanuel Saez and Gabriel Zucman of the University of California-Berkeley.

“A small group of families has taken a massive amount of the wealth American workers have produced, while America’s middle class has been hollowed out,” Warren said in the introduction to her latest plan. “It’s time for the rich to pay their fair share.” She cited findings by Saez and Zucman that the 400 richest Americans now own more wealth than all Black households and a quarter of Latino households combined.

Prior TaxProf Blog coverage:

Scholarship, Tax, Tax Scholarship | Permalink


Sorry for typos: ...this tax work if wealth is legally...

...own their wealth in their own name...

I was trying to beat the clock!

Posted by: Dale Spradling | Dec 26, 2019 1:09:07 PM

I keep asking this question, but never get an answer. How does this tax work of wealth legally transferred to other entities such as private foundations, charitable trusts, and family limited partnerships? Without even looking, I can guarantee you none of these billionaires own their wealth is their name. So would this tax mean Bill Gates would be taxed on the Bill and Melinda Gates Foundation?

Posted by: Dale Spradling | Dec 26, 2019 10:06:58 AM

I think Warren's tax is a good idea but should apply only to those wealthy folks who say they don't pay enough tax, like Warren Buffet. Of course, those folks could pay more right now, but they haven't said that they have. Lead by example.

Posted by: jmod46 | Dec 26, 2019 5:34:06 AM