Economists & Tax Experts Poke Holes in Warren’s Wealth Tax Proposal | NTK Network Economists & Tax Experts Poke Holes in Warren’s Wealth Tax Proposal

Economists & Tax Experts Poke Holes in Warren’s Wealth Tax Proposal

In addition to being difficult to enforce, tax avoidance and evasion would skyrocket.

By NTK Staff | 06.21.2019 @12:15pm
Economists & Tax Experts Poke Holes in Warren’s Wealth Tax Proposal

Sen. Elizabeth Warren (D-MA) wants to tax Americans’ wealth. Actually, she needs to in order to pay for her massive new spending projects she would implement if elected president in 2020.

Warren’s wealth tax seems straightforward at first – a 2-percent tax on those worth more than $50 million and a 3-percent tax on those worth more than $1 billion. With the money the government would collect, Warren plans on implemented a slew of new, expensive spending programs:

Warren projects the levy would raise $2.75 trillion over 10 years, enough theoretical money to pay for a universal child care plan, free tuition at public colleges and universities, and student loan debt forgiveness for an estimated 42 million Americans — with revenue left over.

But the Associated Press spoke to a dozen economists and tax experts from across the political spectrum who say these spending programs – promises Warren is making to Democratic voters in the presidential primary – are built on very shaky ground.

Some of those who laud the principles behind Warren’s wealth tax questioned whether the IRS could collect the tax as effectively as the campaign projects. That skepticism illustrates the challenge Warren would face in trying to execute on an idea she has called a top early priority if she’s elected.

One expert said that “there’s reason to question” Warren’s estimates “or to think they might be on the high side.” Another called them “optimistic.”

One assistant professor at the University of Pennsylvania wrote in an op-ed with former Obama economic adviser Larry Summers that “it is likely extremely premature to bank on anything like the $200 billion plus” that Warren is projecting.

“It’s a failed international model that we’ve decided we’re going to bring to the U.S. without explaining why our version of it is going to be so much better, both from an efficiency perspective but also a revenue-raising standpoint,” said Sarin.

She said top earners will find ways around the levy.

“Whatever resources you have, the ultrawealthy will have more,” she said.

So the question is, if Warren is successful at implementing a wealth tax, which is a highly debatable topic among constitutional scholars, how will she enforce it? And if enforcement proves to be too difficult, how will she pay for these expensive new government-spending programs?

These are the questions Warren has not yet been forced to answer. But as she continues to gradually rise in the polls, more and more scrutiny will fall on this wealth tax and its ability to pay for everything else she’s proposed.

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