U.S. Sen. Elizabeth Warren has proposed a new plan to tax the uber-rich — formalizing her longstanding rhetoric in the wake of a competing plan by the latest headline-grabbing Democratic darling, U.S. Rep. Alexandria Ocasio-Cortez.
Warren, a contender for the 2020 Democratic presidential nomination, wants to levy a 2 percent annual tax on savings over $50 million, and an additional 1 percent a year on savings of over a billion dollars.
“The rich & powerful run Washington,” Warren tweeted as she announced the “Ultra-Millionaire Tax.” “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.”
Her proposal comes as the party drifts leftward, just weeks after Ocasio-Cortez — who has become a popular figure for the left-leaning Democrats, a status once held by Warren — advocated for a 70 percent income tax on high earners.
“This certainly does indicate a shift in the democratic party’s center of gravity,” American Enterprise Institute economist Alan Viard told the Herald of Warren’s idea, which he opposes. “People would have viewed that as too radical just several years ago.”
Viard, a former economist at the Federal Reserve Bank of Dallas, said the tax would be practically very difficult to implement and would drag the economy.
“Saving and investment are the drivers of economic growth in the country,” Viard said. “From a long-term growth perspective, that’s not what you would choose.”
Several European countries such as France, Spain and the Netherlands have wealth taxes, but the U.S. never has — and there’s a longstanding scholarly debate over whether such a tithe would even be legal. The Constitution bans direct taxes at the federal level, except for income taxes, which the 16th amendment made legal a century ago.
There’s an argument to be made that it’s unconstitutional,” Viard said. “It’s still an open question.”
Warren’s office didn’t respond to a request for comment.
“Democracies become oligarchies when wealth is too concentrated,” Berkeley economics professor Emmanuel Saez, who advised Warren on this proposal, told the Herald. “A progressive wealth tax is the most direct policy tool to curb the growing concentration of wealth in the United States.”
Saez said the tax proposal would hit the top 0.1 percent of Americans — about 75,000 households — to the tune of $2.75 trillion over the next decade.
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