Tax the rich. Tax the rich. Just take it. That is the message from progressives.
Here is Warren’s Press Release.
United States Senator Elizabeth Warren (D-Mass.) today unveiled the Ultra-Millionaire Tax, a bold proposal to tax the wealth of the richest 0.1% of Americans. The legislation, which applies only to households with a net worth of $50 million or more, is estimated by leading economists to raise $2.75 trillion in tax revenue over a ten-year period.
For decades, a small group of families has raked in a massive amount of the wealth American workers have produced, while America’s middle class has been hollowed out. The result is an extreme concentration of wealth not seen in any other leading economy.
The Ultra-Millionaire Tax taxes the wealth of the richest Americans. It applies only to households with a net worth of $50 million or more-roughly the wealthiest 75,000 households, or the top 0.1%. Households would pay an annual 2% tax on every dollar of net worth above $50 million and a 3% tax on every dollar of net worth above $1 billion. Because wealth is so concentrated, Saez and Zucman project that this small tax on roughly 75,000 households will bring in $2.75 trillion in revenue over a ten-year period.
Sound good?
Think again. Please consider Elizabeth Warren’s Unconstitutional Wealth Tax.
As she seeks the 2020 presidential nomination of the Democratic party, Sen. Elizabeth Warren is giving voters fair warning that she does not accept the Constitution’s limits on federal power. On Thursday the former Harvard law professor unveiled a plan to extract wealth from the country’s wealthiest citizens.
The “leading economists” cited by Team Warren are Emmanuel Saez and Gabriel Zucman from the University of California-Berkeley.
No doubt many economists will also explain in the days to come why the Warren tax would not raise as much as Messrs. Saez and Zucman expect and how it would distort investment and encourage capital flight from the United States. Ms. Warren implicitly acknowledges this last problem. Her plan includes “a significant increase in the IRS enforcement budget” and “a 40% ‘exit tax’ on the net worth above $50 million of any U.S. citizen who renounces their citizenship.”
There are excellent economic arguments against this new tax plan. But today this column would like to focus on the illegality of the Warren scheme. Ms. Warren seems to understand this problem as well. Typically lawmakers announcing new legislation don’t feel the need to simultaneously try to rebut anticipated claims that the bill is unconstitutional. But the Warren press release links to two letters on the subject, each signed by various law professors at famous universities.
No matter how many academics she persuades to sign on to this ideological project, the plain fact is that the founders specifically prohibited such a tax. A well-informed reader notes: The 16th Amendment authorizes Congress to tax “incomes, from whatever source derived.” It does not give Congress the power to tax balance sheets as well.
Voters can choose to believe that Ms. Warren’s wealth tax would only hit those with enormous wealth. But given the damage she intends to wreak on constitutional limited government, why should they?
Just a Start
These ideas are just a start. Please note that Democrat Presidential Hopeful Wants to Give Everyone $1,000 a Month Free Money.
I estimated the cost of that to be about $2.4 trillion a year.
Wealth in Wrong Hands
Also note New York Mayor Says “Wealth in Wrong Hands”, So, We’ll Take It
New Green Deal
Finally, please ponder ponder the Green New Deal and Medicare for All Proposal by newly elected progressive illiterate wonderkind Alexandria Ocasio-Cortez.
She proposes spending $1 trillion to save the planet. Others more realistically estimate the cost of her plan at $40 trillion.
Medicare for all will cost on the order of $32 trillion.
So in addition to the wealth tax being unconstitutional, it will soon have to pay for all sorts of crazy ideas that will go far beyond confiscating ALL the wealth of anyone who has anything.
Mike “Mish” Shedlock
These 75,000 wealthy families will by tomorrow night have advice from their accountants and financial advisors what measures to take to either avoid this theft or at least to minimize its affect and the options are vast . The odds of Warren becoming President are remote but these people do not take chances . When completed these measures will probably cut down the tax to be paid by 50 -75% and will be very bad news for the US economy .
Ehhh, let the U.S. collapse unto itself when the debt can no longer be increased, however that may work, the rich can run off to New Zealand like they planned. I don’t care about Warren or any of them. When or if we get another recession the job cuts will be so deep as they usually are, we won’t know wtf hit us. The youth I know aren’t even considering saving for retirement anymore, the only ones who are – are the immigrants who know they can make enough here in about 5 years to go back home and have something, being that they don’t have the government overhead to take it all away, us permanent residents will just stay broke paying taxes and health care costs, and yeah that’s the only good reason to increase wages, so the states and corporations can just suck it back in.
Ignoring whether or not it’s a good idea, why would a wealth tax be unconstitutional? Estate taxes are constitutional, and a wealth tax basically a while still alive estate tax.
isn’t estate tax taxing the transferring of money from one person to another? I think that’s the issue, you can tax money moving hands just not money sitting still.
Hollowing out of the middle class and economic destruction of the working class has been enabled by massive illegal immigration which has stagnated and lowered wages of tens of millions of Americans.
However Warren is all for open borders and continued massive illegal immigration.
Warren is a leftist-hypocrite in addition to being economically incompetent and being a fantasist liar with her Indian background.
This person took a place from some deserving real American-Indian or African-American because Warren was hired because universities where she worked wanted to increase diversity and even touted her diversity after hiring her despite now claiming that Warren was hired for her talents after Warren’s diversity charade was proven to be a 1/1024th LIE.
Instead of confiscating money from the rich the correct way to fight inequality would be to force corporations to pay better wages through working of open markets by stopping further illegal immigration and deporting the 29.5 million illegal immigrants currently in USA (MIT-Yale study).
With no illegals to lower wages companies would be forced through market forces to pay higher wages.
The concentration of wealth and its transfer through inheritance leads to financial instability and erodes democracy. Massive taxes curtail the ability to innovate and improve society. One solution that attempts to resolve the good and bad of capitalism is to fund Social Security and welfare with a very high death tax. The current system holds back the youth by forcing them to pay for the social debts their parent’s generation incurred.
I have read Warren scholars’ dissertations on the legality of the wealth tax. They sound very much like John Yoo’s dissertations on the legality of torture written for George W. Bush.
No one should be rich enough to buy a presidency or standing in any political institution. An economic system that promotes wealth disparity is broken and unsustainable.
US democratic freedom, capitalism and the anarchistic ideal of small government has achieved little except global economic and environmental corruption. That’s because constitutions written by elite establishments, which inevitably favor wealth and power are destined to continually fail; because they overlook the needs of the whole economic organism
A government that invites participation from an independent middle class (society’s majority) would work better. Replacing the senate or upper house with a jury-of-peers chosen randomly from the qualified working-class community to audit government activity, is one way to stem the inevitable corruption and establishment clientelism that prevails in modern political administrations.
Or we can just keep going through repeated periods of poverty, revolution and political decline in which everyone suffers… at least until the planet finally dies.
Trying to find sympathy for people with net worth of $50 million and above. Failing.
The US already has a wealth tax: printing money. Calling the printed money a “loan” is just a convenient fiction. It’s never paid back.
When you print dollars, every dollar and every bit of dollar-tied “wealth” is diluted. Taxed.
Where, who, and what is that “wealth”? I’d go with young people being the “rich”. Wealth is in their bodies. Dwarfs the chump change old (AKA, the “rich”) people have saved.
Interesting thought experiment: How much would a rich 80 year old with 50 million dollars pay for their 20 year old body?
Interesting thought experiment: What if a country eliminates all taxes and just prints the money their government spends?
In your thought experiment, if the rich 80 year old is smart, he’ll stipulate he gets to be 20 back in his day, not today. Today’s youth aren’t enjoying themselves very much for a variety of reasons. If I could go back to college today, I’d like the skewed gender imbalance that greatly favors guys, but that’s about it. Otherwise the experience has degraded significantly since I went in the ’90s.
For your other thought experiment, I and others have already asked why taxes still exist. The Fed prints everything, so why not drop the pretense of balancing the books?
Ha, ha. Yeah, my kids seem to think of “the 60’s” as being a wonderful time to be a kid. But I think kids now have it soooooo good! Hey, everybody gets easy indoor work with no heavy lifting. What’s not to like?
Forget the college debt thing. Colleges were already in a bubble back in the mid-00’s when the lets-get-college-kids-to-borrow idea was pushed through and when foes of it said what would happen is exactly what happened: the price cranked up and suckers ended up deeply in debt for no added benefit.
You went to school in the ’90s? You poor soul. I went in the ’80s – those were the days! And I wish I’d gone in the ’70s, or even better, the 1440s when the plague was really good fun.
If I could go back to being 20, I’d bloody hope it was today, or even better, 25 years from now – the World is a far better place than it was 20 years ago.
Newer doesn’t necessarily mean better. You want to be a college kid today, when one accusation could derail your life? When you can be tarred and feathered on social media for no reason? Kids can generally avoid those pitfalls by laying low, but college and early professional life should be about boldness and getting your name out there, not hiding.
Once this debt ponzi unravels, nobody will be able to argue that things get better with time by default. Yes, things theoretically SHOULD get better, but when your society is run by financial idiots it jeopardizes that principle.
There are pitfalls for all ages – one of the guys I went to Medical school with put a shotgun in his mouth because there was no mental health care facilities (just to repeat, this was in a Medical School no less). Another overdosed on H and there was no Naloxone so he died too. Gay kids got beaten up, and it was regarded as normal – gay bashing was a joke back then. Getting shamed because you are an asshole once is not fair, but there was plenty, if not more, injustice back then as well. And heaven help you if you didn’t have a Y-chromosome.
I’ll take 2019 over 1979 every single day of my life.
I’ll agree that pitfalls always existed, but would argue strongly that 1979 was better than 2019 simply because financial disaster wasn’t a certainty then. We were subject to more normal economic cycles back then, not central bankers run amok, choking the life out of the world.
I get that there were a lot of problems for women and minorities. I’m a white guy but my ex wife, who I spent about 15 years with, is black (AA). Just before her I dated a Muslim woman from overseas for about two years as the 9/11 circus unfolded. She encountered the worst bigotry I’ve ever seen, unfortunately a little of it came from my own family. It sucked.
This discussion is why, even though I gravitate left on social issues, I don’t like the modern American left at all. Just because we have more accommodations for trans people and sensitivity training galore does not mean we’re a better society. They want to ignore the financial Sword of Damocles hanging over our heads, which will cause far more anguish than racism or hurtful comments ever could.
So the left is blind and the neocon right will always be xenophobic jerks. As a newly divorced guy, it looks awfully appealing to head overseas, maybe for good. The America I know won’t handle financial armageddon well at all, possibly worse than anywhere else. We both know that in this acrimonious environment, the country will turn on itself, not work together to dig our way out of the rubble.
There’s a rumor that rich old guys are getting blood transfusions from kids with the idea that it will increase vigor, etc. So my guess is they’re happy to pay big bucks.
But diluted dollars don’t impact the rich as much as you might think. For one thing they tend to have access to money before the rest of us, so they can purchase before the inflation hits the marketplace. And they put their money in a lot of things that track inflation fairly well, like real estate and artwork.
How much will he spend??? As much as it takes even if it is $200 million that he used his $50 million to back stop a loan for.
Printing money and deficit spending are NOT taxes on the rich.
Both are ways those with first access to money (the rich) get richer.
Printing money and deficit spending are a tax on the poor but they are so badly educated they do not realize this and instead believe easy money and deficit spending are good for them.
Things like wealth taxes address the symptom, not the cause. We do have a yawning wealth gap in the US (and in the West in general) because of out of control bankers. The cause is QE, ZIRP, bailouts, incentives to hollow out companies rather than build, etc. Reining in this corruption is the only effective way to deal with rampant inequality, but we all know that’s not going to happen.
Eventually Gilets Jaunes will spread throughout the West, but it should have happened a decade ago.
The uber wealthy will simply leave and take their wealth with them
And then they’ll come for the not so wealthy and wealthy xtract ever increasing amounts to make up for the shortfall…. The road to ruin is always paved the same way.
They will no doubt try, but it won’t be like all of the other countries that may only have pitchforks to rebell. If everyone would go to the Shot Show, which I just got back from in Vegas, the folks would realize we have a very robust standing army. All I can say is, God help the oppressors if they go to far. Like everything else, the private sector always performs better.
If you accept that we are in the middle of another industrial revolution in the form of robotics then her proposal is not without merit. Automated manufacturing will displace millions and million from work onto the dole queue. When you consider what the social effects and implications are then taxing the ultra-rich may not be so bad a compromise after all.
It will displace types of work, but the ability for machines to do everything humans can do hasn’t happened yet. There will be shifts in the productions.
There was a time when all metal was made by hand, by blacksmiths. Populations were much smaller then but we haven’t collapsed from it.
The original ATT rotary phone was hand assembled. It’s no longer as popular, being replaced by millions of cell phones, all of which are assembled by automation.
There are hundreds of cases where the fear of workers being unemployed has proven wrong from the industrial age to much more recent history.
Unfortunately, we haven’t seen this get resolved yet because we just don’t know what those jobs will become. When someone does, he will make a lot of money.
That’s true, but the other scares didn’t occur in the ZIRP era. It’s not the technology that’s rending people superfluous, it’s finance itself. Why waste time developing products and marketing them to an increasingly poor public when you can just get your hands on freshly created 1s and 0s? The trick is to get free money and gamble with it. If you win, you pocket the profits. If you lose, get bailed out!
You may be right but if you are then the real problem will be to create as many jobs in the same time as you lose them. Right now workers are being displaced by automation in many areas with no signs of a new wave of job creation to replace them.
Australia is a country of agriculture and mining. In both areas automation has displaced thousands of workers. Mining of all types now use automated methods which formerly employed thousands. Agriculture now uses automated methods to pick fruit and vegetables.
Much of the consumption today is based on federal government debt, state debt, county debt, city debt, company debt and consumer debt so without forever increasing debt balances many more people would be out of a job.
When this debt living will be stopped when carrying capacity stops at the same time as automation and robotics make tens of millions of jobs redundant there will be economic chaos.
Robotics and automation will make many people unemployable therefore there will be mass unrest in USA unless borders are closed with a wall to stop illegals and by not taking migrants bogus asylum applications in the first place to stop the flow of new illegals and existing illegals should be deported.
“Robotics and automation will make many people unemployable therefore there will be mass unrest in USA unless borders are closed”
I think you are taking a too narrow view. We do not live in fortress America but in a global world where social unrest in one country will spillover into another. Migrants into America is a very small part of the problem. If global automation forces people to lose their jobs then those people cannot buy US goods. Result equals US unemployment regardless of whether you have a wall or not.
Well, you can change the Constitution, right? That is how women and black people ended up voting…
Not easily. I imagine they will work around the Constitution because it’s just so old and out dated. At least that’s what they will tell people enough times to believe it.
Now, now Mish, Elizabeth, like all demagogues, is simply going with what seems to be working. For Hitler, it was Jews and Gypsies. For Elizabeth, it’s the wealthy.
The Democrats were surprised by how quickly Bernie moved the Overton window in 2016 – they are now moving it back to the pre-Clinton days. All the Clinton haters are going to grow up once Fox News etc. stop mainlining them with anti-Hillary nonsense and realize that the Clintons were the best friend in the Democratic Party the right wing ever had.
Also, don’t get your knickers in a twist so quickly Mish, “outrageous” statements at the beginning of a long political campaign are a way of trying to be in the “recognized contenders” group. If you really are concerned about Warren, don’t rile up the crazies like this. You are helping her.
She never has said anything about creating and preserving wealth, but then again, she’s works for an organization that has been on a wealth destruction path for decades.
There’s that liberal Mish again promoting liberal ideas
They could do a bigger death tax. Just takes longer. I gave up on the Libertarian party in part because excessive centralization of wealth undermines all freedoms and the Bill of Rights. Rich people can buy (lease?) Congress. Equality under the law becomes a delusion.
I’d suppose that EW’s net worth is $49,999,995.00
The constitution never stopped the ACA, when the Supreme Court rewrites law. Maybe when RGB is out someone who respects law will enter (doubtful). That said a wealth tax is a bad idea, my guess is a VAT tax is going to be on the table soon.
As for the Medicare for all, a joke. But I would be for ”Medicare prices for all at any institute that accepts gov payments”. This would reduce the BS price games and drop prices by 50-700% (I looked up my actual bills vs CPT codes and that is real). Plus all private practices would still be able to set their own price, but they too would drop.
If people like AOC, Beto, Warren and their ilk continue to be elected, everyone in this country will soon have a net worth of at least $50 million.