Hey Liz!
YOU didn't TEACH that
Posted on 09/05/2019 10:23:51 AM PDT by karpov
Senator Warren’s proposal would hit fortunes above $50 million with a 2 percent annual wealth tax. Fortunes above $1 billion would be taxed annually at 3 percent.
Why is this a bad idea?
Recent research and analysis convincingly argues that the plan would collect a fraction of the revenue that Warren’s advisers expect. Lawrence Summers, the economist and former Treasury secretary, and Penn professor Natasha Sarin argue this from the U.S.’s experience with the estate tax. And economists Matthew Smith, Owen Zidar and Eric Zwick present preliminary estimates suggesting that the Warren proposal would raise half as much as projected.
It may be unconstitutional, and its constitutionality would surely be challenged.
It is equivalent to an income tax of well over 100 percent, in many cases. For example, a 2% wealth tax on an asset that yields a steady 1.5% return is equivalent to a 133% income tax.
By reducing national savings, it would either reduce investment — which would reduce productivity and wages — or increase inflows of foreign capital.
It would not curb political influence in the way its advocates suggest.
(Excerpt) Read more at nationalreview.com ...
There is no possible way that even the current size of government can be sustained, as government debt levels attest.
Making government larger will just bring the inevitable collapse faster.
Same lie as the original income tax. If allowed, the government will require an annual complex filing of each person’s net worth and the threshold will be down to at least 100k, if not lower. And the rate of taxation will be much, much higher.
And in the value of your 401k, your house, cars, everything. People will be paying tax on illiquid assets using income they may not even have.
As a matter of Constitutional law, a tax on wealth qualifies as a “direct tax.” Per Article I, section 8, direct taxes must be apportioned among the states. That’s settled law (see Pollock v. Farmers’ Loan & Trust Co..)
Not happening.
How constitutional is this? The 16th Amendment allows income to be taxed. Wealth is not income. I don’t think Warren has a magic wand that lets her tax anything she wants, even with a compliant congress.
Even if Warren become POTUS it will never happen. Congress will pass enough tax avoidances to get the bet effective tax rate down. A little history; during WWII The top tax rate was 90% but the net effective tax rate was about 19%. After WWII Truman cut the top tax rate to 70% but the net effective tax rate remained at 19%. JFK cut the top tax rate to 60% but the bet effective tax rate remained about 19%. Regean cut the top tax rate to 36% but the net effective tax rate remained about 19%. Currently top tax rate is about 36% but guess what, net effective tax rate is still about 19%. Bottom line, the sweet spot is about 19% and I’m guessing it will remain there.
Hey Liz!
YOU didn't TEACH that
Bad idea does not mean unpopular idea.
And sadly this idea will prove to be very, very popular with large numbers of human lemmings.
He's not the originator of the concept but he popularized it beginning in the early 70s. I learned it at university working on my graduate degree in business.
Rates below 17% increase tax revenues but revenues start to come down if the tax rate is pegged at higher than 17%.
IOW, the actual maximum tax rates will still only produce revenues in the 17% tax rate range because of deductions, write-offs and loopholes.
But that 17% rate is pretty close to the 19% effective tax rate you state.
My memory of Laffer's curve and the specific rate he predicted would maximize government revenues may not be entirely accurate. It's been a few decades since graduate school.
Zero Cheers for Warren’s Wealth Tax
Foreign Warren...from outer space.
Are they tallking about an asset tax (like real estate taxes) or a net worth tax?
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