The 'Wealth Tax': Liz Warren’s Campaign Against Those Who Succeed

P. Gardner Goldsmith | October 31, 2019

There’s nothing more pleasurable for “trick or treat” time – or anytime, for that matter – than spending some hours reading and listening to the words of the ever-charming, always authentic Native American Indian and paladin of “the little guy,” Elizabeth Warren. And recently, the Massachusetts Senator made the experience doubly exciting, not by turning on a livestream and awkwardly saying, “I’m-uh, gonna get me a… beer,” but – shocker -- by threatening to get more of other people’s property.

It’s in her typically class-envy-based “Wealth Tax”, a proposal that panders to the thievery-minded in America. A plan that could rise like a scary monster.

So let’s take a look at the creature she’d like to give life, among the many she’s already proposed or supported in her gothic, goosebump-raising time in DC.

Warren wants to impose a 2 percent annual tax on household assets worth more than $50 million and a 1 percent surtax on households that have net worth calculated at $1 billion or more.

And, of course, since most of us don’t have nest-eggs that large, it’s totally cool, see. Those people have more, and that’s not fair. And they can “afford” what we and Liz take – because we tell them they can and we have “better uses” for their property. And Faux-ahontas assuages any possible guilt we might feel over our covetous acquisitiveness by implying in a never-ending tirade of cliché-ridden eruptions that those who “have more” do not deserve to have it.

Pay no attention to any vestigial link you might have to fundamental human ethics. 

It’s all for the best.

That’s why she started her push in January by Tweeting:

The rich & powerful run Washington. Here’s one benefit they wrote for themselves: After making a killing from the economy they’ve rigged, they don't pay taxes on that accumulated wealth. It’s a system that’s rigged for the top if I ever saw one.

Because, you know, by being “rich” – however one defines that on the ever-sliding scale of subjective jealousy – said description automatically means you didn’t earn it, you’re powerful in Washington, and only benefit yourself. Oh, and forget the fact that you ALREADY PAID HUGE TAXES ON THE EARNINGS BEFORE YOU SAVED AND INVESTED THE REST THAT BECAME THIS ACCUMULATED WEALTH.

Those would be taxes used to pay Ms. Warren’s salary and to pay for government pork projects and patently unconstitutional regulatory agencies hampering productivity, stifling innovation, and driving businesses and investment overseas.

Next in her push comes her “pay their fair share” drivel, lodged in her harangue of Tweets from that momentous day, January 24, 2019:

It would make the ultra-rich pay their fair share & generate nearly $3 trillion over the next 10 years. A lot of rich and powerful people won’t like it – but I don’t work for them. Sign our petition if you agree: It’s time to tax the wealth of the top 0.1%

Ms. Warren, since you’re so animated about “fairness”, you may want to offer more info about just who pays the bulk of the taxes.

As the National Taxpayers Union Foundation consistently reports, tax returns to the federal government show that the top earners not only pay most of the US taxes, they pay the vast, vast bulk of them. As of the data collected in 2018 for the 2017 filing period:

The top 10 percent of earners bore responsibility for 70 percent of all income taxes paid – up slightly from 2016 – while half of all tax filers paid 97 percent of all income tax revenue. Indicating the degree of progressivity in the code, the bottom 50 percent of earners took home 11 percent of total nationwide income while owing 3 percent of all income taxes.

Additionally, there’s Warren’s blithe and fantastical assumption that her vampiric thirst for green blood will suck in the $3 trillion she claims.

Here’s how economics works, Liz.

Humans change their behavior to avoid pain and conflict. They will expend extra effort to avoid greater threats to their well-being and living standards – the very things humans work and trade and make inventions to improve. When you threaten them with government-perpetrated theft, they will expend energy and earnings to avoid your predation as much as possible.

That means that the very people American small business upstarts need to invest in their ventures and R and D will no longer be willing to invest in new ventures. They’ll send their cash outside the US. US stock investment will be attenuated in favor of overseas ventures, with new overseas holding companies handling the deposits. Trusts and non-profits will replace savings accounts, messing up natural interest rates and, again, syphoning away useable capital that would normally be lent out to promising business ventures. That means the monster tax bill likely will suck in far less than $3 trillion over “the next ten years”.

There’s historical data to support this, something Peter Suderman delved into for Reason in February, finding that Sweden’s attempt to impose a tax on accumulated wealth utterly failed and was repealed nearly ten years ago.

Suderman’s cogent analysis also provides insightful thoughts about the calculation problem:

As the Tax Foundation's Nicole Kaeding and Kyle Pomerleau note, the very rich ‘own more than publicly-traded stock, such as real estate holdings, trusts, and business ownership interests. It is difficult to value these assets on an ongoing basis. Imagine a large privately-held company—its value could change almost daily. How would the tax handle these fluctuations?’

Then there’s that nagging little thing, the US Constitution:

Aside from the income tax, which required a constitutional amendment before it could be implemented, the Constitution prohibits the federal government from levying "direct taxes"—taxes that aren't spread out amongst the states according to population. Some proponents of the estate tax have argued that it could pass constitutional muster, but opinions are split, and there's probably more reason than not to believe that it would be struck down. When estate taxes were challenged, for example, they were upheld as taxes on the transfer of wealth rather than on its existence. That wouldn't be true in this case. Warren's wealth tax would target fortunes simply for existing.

Which, as Suderman also speculates, might be the point. Warren’s act is pure class envy. After all, this is the woman who gave us the “You didn’t build that” line months prior to Barack Obama using it, implying that business owners who risked their own capital and invested their own time, money, options, and lives into building consumer-pleasing businesses actually are parasites on the “infrastructure” provided by the government. It’s time to “pay back”, implies Lizzy…

…Never bothering to follow the logic chain to ask, “Hey! Where did the government get the money to offer all those crumbling roads and bridges and poorly plowed, rarely salted overpasses and bad tunnels?”

Oh, yeah, it came from private citizens who produced things, sold things, and had their earnings syphoned away by parasitical people in DC…

Liz, one can only stand parasites so long before having to escape.

Which is precisely what many people will do if your monstrous plan ever passes.