I find the wealth tax proposal interesting. Unlike every other “tax the rich” scheme I’ve heard, it ACTUALLY taxes the rich. (I don’t really think a family with 200K of income living in NYC or San Francisco or the other VHCOL areas of the country is rich. Getting there, yes, but probably not living nearly as well as someone making 100K in my hometown.) In Warren’s proposal, the wealth tax hits those with 50 million of assets at 2% per year. I think it’s fair to describe someone with 50 million in assets as unambiguously rich.
Warren minimizes the impact of the tax. My first thought? 2%, huh, that’s a lot. You can expect to make 4 or 5% on your assets annually, so she’s taking half of that, was my rough guess. In fact, she would have halved the wealth of all the major billionaires – Bezos, Gates, etc. I think the impact on those lower on the income spectrum would also be interesting to understand. I would guess it would be greater, because they are probably less effective at growing their wealth. In fact, she probably did more than halve the wealth of billionaires when inflation is accounted for.
Most interesting to me would be whether she could ever pass such a tax. I always get so annoyed at people like Buffett or Gates advocating for higher taxes. These guys have so many tax shelters that they basically don’t pay much in the way of taxes regardless of how the rates are set. What they’re basically doing is advocating for taxes on other people – the upper middle class and slightly wealthy. (It’s very popular to advocate for taxes on other people, of course. Buffett is not unique in this pastime.) However, a wealth tax is a whole different ball of wax. That would actually affect these fat cats. They have been surprisingly silent on the topic – what a shock.
The increasing gap between rich and poor and its negative affect on society is hard to deny. It feels like a precursor to empire collapse, and something like this could really make a difference. What gives me pause is that the income tax was initially only paid by the very wealthy. I fear if this tax were introduced, our children or grandchildren would find themselves paying it on their upper middle class wealth accumulation. (See – I am like everyone else, advocating for taxes on other people.) Nevertheless, I think I would / could support it, EXCEPT that I find Elizabeth Warren’s proposals breathtakingly spendthrift in places. That of course is why she is proposing the tax, not just for fairness, but because it is simply impractical to raise the amount of money she’s asking for through the existing tax structure, even if rates are increased.