Elizabeth Warren’s Wealth Tax

Maren Chevalier, Author

Elizabeth Warren, a Democratic Presidential candidate who is currently polling with front runner Joe Biden, has recently proposed a wealth tax as part of her campaign platform. ​This new tax would only apply to households with a net worth of $50 million and above. ​These households would pay an annual 2% tax on all assets above $50 million. If a household’s net worth surpasses $1 billion, an additional 4% would be taxed for every dollar over $1 billion. According to Elizabeth Warren’s campaign website, “All household assets held anywhere in the world will be included in the net worth measurement, including residences, closely held businesses, assets held in trust, retirement assets, assets held by minor children, and personal property with a value of $50,000 or more.” This new plan raises new questions about taxing the wealthy. Will this proposed plan fund and will this plan raise enough money to support those ideas? These new tax revenues would go towards funding universal child care for all children age 0 to 5 along with Universal pre-K for every 3- and 4-year old. The tax would support free tuition for all public schools, 2-year colleges and 4-year colleges, forgive student loan debt for 95% of Americans with that burden, award $50 billion to historic black colleges, raise wages for child care workers, support $100 billion over 10 years to fight the opioid crisis, and finally to put down money to support the Green New Deal and Medicare for All. That agenda adds up to a whopping $2.75 trillion. Will this proposed wealth tax be able to create enough revenue to support that agenda? Howard Gleckman, a senior fellow at the Tax Policy Center, says that ​“A large share of wealth held by the high net worth taxpayers is in the form of privately held businesses… And these are notoriously difficult to value. In effect, the IRS would have to prove that a taxpayer’s valuation is unreasonably low.” This means that Warren’s plan would actually collect less revenue than it proposes. Will Warren be able to fund her expensive programs by unfairly taxing the wealthy? This raises a concern for middle class Americans, if Warren cannot collect the money for all of her ideas, will she then start to tax middle class citizens? Should having more money automatically mean that you have to pay the government more money and fund programs you may not even support? With the 2020 election less than a year away, these new ideas have sparked many intriguing questions.