Columns, Constitutional Law, Politics

Warren’s Wealth Tax: How A New Bill Would Convert The Tax Code Into A Canned Hunt

Below is my column in The Hill on introduction of Elizabeth Warren’s wealth tax.  The bill contains two notable addition: a massive increase in the size of the IRS and what I call a “captivity tax” to try to keep the wealthy from fleeing. The odds are that Democratic leadership will see some of the same problems with this bill, but the danger is that such legislation will be difficult to oppose due to its public appeal. Moreover, there is a lack of honestly about the constitutional and practical issues surrounding a “wealth tax.” Such details are lost as Warren pledges to go after the “Rembrandts … diamonds and … yachts”  of the wealthy.

Here is the column:

For the purveyors of identity politics, there is no surer bet than leading the masses against the “super rich.” Since philosopher Jean Jacques Rousseau spoke of “eating the rich” before the start of the Reign of Terror, politicians have had an insatiable appetite for class warfare politics.

In her “wealth tax” legislation, Senator Elizabeth Warren insists she is merely nibbling on the rich but still can seize $3 trillion over the next decade, a figure challenged even by one Biden administration economist. Warren has also included an “exit tax” to stop the rich from fleeing. Not surprisingly, it is wildly popular outside of super rich circles. It also is arguably unconstitutional and manifestly impractical. Yet, in Washington, bad policy often makes for good politics.

Warren would impose a 2 percent annual tax on the net worth of households and trusts above $50 million and a 1 percent surtax on the net worth of those above $1 billion. She is not the only politician pledging to soak the rich. Some state legislators have proposed their own versions. The difference between the federal and state proposals is that express language of the Constitution would seem to bar a wealth tax. Article One permits Congress to “lay and collect taxes, duties, imposts and excises.” However, it requires that these “be uniform throughout the United States.” The next section says “no capitation or other direct tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”

A wealth tax is a “direct tax.” While James Madison and Alexander Hamilton disagreed on the constitutionality of such a tax, they agreed a direct tax under the Constitution would include a wealth tax. Hamilton agreed with Madison that a direct tax could be a tax “on the whole property of individuals or on their whole real or personal estate.”

There are good faith arguments that a wealth tax would be constitutional, and there are cases on both sides of that issue. Estate taxes and other forms of taxation can be cited to challenge the bright-line meaning of these terms. However, the problem does not end with Article One. When the 16th Amendment was ratified, it allowed for federal income taxes, and only income taxes: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Putting aside the dubious constitutionality of Warren’s tax, there are even greater practicality problems. Valuing wealth from real estate to luxury items would require a massive increase in the Internal Revenue Service and a huge increase in reporting responsibilities. Warren seems to acknowledge how much of a bureaucratic increase is needed: The bill mandates a breathtaking $100 billion increase in IRS funding over the next ten years.

Even with a massive increase for 2021, the IRS annual budget is just over a tenth of that figure, at $11.92 billion. Warren also seeks to mandate a greater number of annual audits for this engorged IRS to conduct: Each year, one third of those covered would be audited, on everything from cars to art. Such calculations would require establishing not just their purchase price but their current market value.

Then there is the practical problem that billionaires are mobile — not fixed — tax sources. Put simply, they can leave. That is what happened in other countries pursuing a wealth tax, which found the practical enforcement of such taxes was more difficult than assumed. France lost 12,000 millionaires per year and later reversed course with tax cuts, to try to lure back the wealthy. Only a handful of countries are still trying to make such taxes work.

Warren believes she has a solution to that, too. It is another tax, of course. Call it a “captivity tax.” If you decide you do not want to be the subject of what liberal tax expert Josh Bivens calls the “very big experiment,” Warren threatens to hit you with a confiscatory tax of 40 percent of your net worth (above $50 million). Thus, if you accumulated stuff worth $500 million, Warren would make you leave more than $180 million as the price to be free of her tax regime — it is pay or pray.

Of course, not only will many consider leaving before such a tax is imposed, but many billionaires are likely to have second thoughts about coming to the United States (and investing here) if they will be captive to the Warren tax like some money mastodon stuck in a tax tar pit. The promise of being audited for everything you own every three years down to your last Cartier watch is not very appealing.

The captivity tax highlights the wealth-redistribution mindset underlying Warren’s “experiment.” Warren thrilled audiences for years by telling the rich she was coming after “your Rembrandts, your stock portfolio, your diamonds and your yachts.” In one Democratic debate, she got applause by rubbing her hands together after saying she would take some of the wealth of fellow candidate John Delaney, a self-made millionaire worth $65 million. She has now made good on that threat.

Warren and most of her colleagues have, of course, not made such fortunes. But where others make wealth, her skill is taking wealth from others, and she believes she has achieved the holy grail of the taxing set: Preventing flight with a captivity tax. She hopes to now pursue Delaney and others for their art and diamonds and they won’t be able to escape, even on their now-fully-audited yachts. It is like a tax version of a canned hunt.

Biden administration officials like Treasury Secretary Janet Yellen recently said they are considering this option and other tax increases to help pay for trillions in new spending. But the problem with a Rousseauian diet is that it is as addictive as it is rich. It relieves politicians of responsibility for uncontrolled spending by fueling a type of class warfare. It all may collapse in court, but that is years — and trillions of dollars — down the road.

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University. You can find his updates online @JonathanTurley.

171 thoughts on “Warren’s Wealth Tax: How A New Bill Would Convert The Tax Code Into A Canned Hunt”

  1. “Warren would impose a 2 percent annual tax on the net worth of households and trusts above $50 million and a 1 percent surtax on the net worth of those above $1 billion.”

    She cast the net too wide. She set the bar too low. Thus, it will surely fail.

    That was either stupid or intentionally undermining her own plan. Don’t underestimate the cunning of billionaires where things like this are concerned.

    I would not start with a tax. I would start with antitrust breaking up Silicon Valley giants, and possibly that will draw in telecom oligopolies too.

    That is the first and foremost target if you want to reduce the overweening power of our native billionaires over the rest of us.

    Sal Sar

    2. So now Sal Sar is ready to go after Silicon Valley. Where was Sal Sar when Silicon Valley cancelled the voice of the POTUS. I see, the enemy of my enemy is my friend. We got us a real thinker here folks.

      1. You fool TIT you not been reading this blog long. I was all over Jack Dorsey for cancelling Trump. I voted twice for Trump. You better know what you’re talking about before you flap your toothless gum at me. Sal Sar

      2. TIT fails to appreciate, if he or she likes Trump, that the group of billionaires hated his guts. Because he opposed globalism. Which they love and crave and has made them what they are as a group. If anything Trump betrayed the billionaires. And they shivved him good in 2020. Go look at the campaign contributions. Adelson and maybe two others were backing Trump and the other 800 or so were on board against him.

        TIT, you’re the one who needs to do some thinking. Sit down and take notes. I’ve disgorged elements of tax policy today that you need to assimilate before you even have meaningful questions let alone going to start making insults.

        Sal Sar

        1. I’ve disgorged elements of tax policy today that you need to assimilate before you even have meaningful questions let alone going to start making insults.

          Until you justify the spending side of the equation, then all you’ve done is disgorged schemes to transfer money from the citizens to the government.

          1. Olly, the spending is out of control and often for the wrong objectives. I admit that critique has logic to it.

            Nonetheless, we often have to approach questions like this in isolation, ceteris paribus as economists say

            As for citizens, the group of billionaires is chock-a-block full of selfish cretins who seek to destroy the United States with globalism. Perhaps not every single one, but as a group, they are an enemy of the people. I am not impressed with the fact that they call themselves Americans. I know that makes me sound like a commie but I prefer to be called a nationalist. I’m for the nation and they are seeking to milk it, weaken it, and eventually will try and run away once they have destroyed it. They are scoundrels and nearly every bad idea that plagues us has their donations funding it. I am completely serious now, if Republicans and conservatives do not wrap their heads around this fact, then there is little hope at all for electoral change that makes a difference.

            Then again conservatives have failed to appreciate this for many many decades if not a century. ABout the only conservatives I ever heard who had pause about the billionaires were the JBS. You know, BIrchers? Yes, they have been denouncing plutocracy all along, but, they were nutters, right? Not so crazy after all, I think!

            You have to go back to Teddy Roosevelt to find a superior champion of the people who understood this dynamic and successfully acted upon it to strengthen our nation, giving us the tools of antitrust that are so rarely used to effect.

            So what about Don Trump. What did he do about his foes in Silicon Valley? Did he lay a finger on them? Did he not see what they did to silence him in 2020 coming?> Because they were already busy banning, deplatforming, silencing critics left and right long long ago. No. He told his AG to “study” antitrust action against Silicon Valley. Hey– studying it was not going to do anything. We don’t need to study it we needed an AG that would DO IT.

            Best not to hold our breaths but maybe we can get a bipartisan agreement on what should be done and then the issue will have traction.

            Sal

            1. Sal says he is a nationalist but he calls for more government control over the means of production. How do you wrap your head around that one. Sal’s a lot of fun. All you have to say is the word billionaire and the lid blows sky high.

              1. What you know about nationalism fits in a thimble. I am not an apologist for global capital. They depend on the laws of nation states to protect their fortunes and when they run amuck and go too far with their crazed schemes, the very same nation states can cut them down to size, too.

                I would certainly impose “government control over the means of production” that would render social media companies like twitter into utilities. I would use antitrust and break them up a lot too. Do you think we live in America circa 1815 or what? Did you know we have ten thousand other laws from occupational safety to workers comp to securities laws etc that “control the means of production?” I wonder what it would look like if we reversed all that. But some folks would give it a stab I guess!

                A nationalist does not let the plutocracy utterly take over everything just as they have before our eyes. But some kind of misguided libertarian ideologue would be stuck saying oh oh oh we can’t do that! And the billionaires would eat us all for lunch. Sal

            2. What happens with the globalist’s agenda if the US government is limited to expenditures necessary for our national security? I know this may sound naïve, but if the billionaires have the power to destroy this country, then they also have the power to create the system of government they need to thrive. This nation is chock-a-bloc full of selfish cretins. How many of them are more than happy to thrive at the expense of the state? We have many problems, with many causes, but I would argue we have 3 root problems that combined, have led to our main problem: an out-of-control federal government.
              1. US Civics ignorance
              2. Voter apathy
              3. A lack of self-reliance

  2. I don’t see much difference between Senator Warren’s bill and the Nazi confiscation of Jewish possessions.

    1. There are huge differences. But that’s an interesting comment, from auh2064, so let’s unpack it.

      The Nuremberg laws were very broad and sweeping anti-jewish laws that would be totally unconstitutional in the United States. They aimed to oppress Jews and eliminate them from positions of power wealth and influence in German society. However, relatively few particulars that related to taxation. One small exception was that income tax deduction for Jewish children was abolished. That was the only one I could find in a cursory search.

      There was also registration of property requirements for Jewish people. This was a prelude to confiscation. The confiscations came and were very aggressive. Perhaps people have heard about how today’s Jewish billionaire George Soros, who had been placed as a teen with a Hungarian foster-family to help him avoid persecution, used to ride along with his foster-father who was actually involved in the forfeiture process as it was executed in Hungary. I think it’s unfair to blame a teenager for that, and there’s plenty of other things to blame Soros for besides that if you want to complain about him. I certainly have. But anyways, that was “Aryanization” forfeiture as it played out in Hungary.

      Anyhow, back to comparison to Warren’s proposal, here there is no such requirement of registration apparently but one might consider our “gift tax return requirement” as something different and yet similar, in that it requires disclosure of certain transactions that do not actually trigger a tax payment obligation. The gift tax return is of a piece with the estate tax, which kicks in around 11 million. The estate and gift tax have been around in one form or another since long before WW2 so there is nothing particularly antiJewish about them.

      But back to 3d Reich era Germany where they had exactly that intention. There was a different law that was not strictly limited to Jews but had an impact on them when they tried to offshore their assets. Here is a full description

      https://en.wikipedia.org/wiki/Reich_Flight_Tax

      That tax has been imitated by many other nations which tried to stem capital flight. I suspect the Soviets may have already had something like that before Germany but I have not researched it. But since end of WW2, many nations have some sort of law that addresses the phenom of rich people offshoring assets for one reason or another. The United States has had for quite some time laws about renouncing citizenship for income tax purposes for example. But those do not affect Jews as such, though Jewish people may be affected by them if they renounce citizenship.

      Putting aside questions about how this might impact some Jews or not, it would affect the people who are at the asset levels stated in the proposed law, Jewish or not. I predict this law will fail and fall flat. If offends one of the key tenets of globalism that the billionaires are advancing: the free movement of capital across borders. They want that and they don’t like any tax law that will presume to limit it. They would get rid of the income tax law about renouncing citizenship if they could, that’s for sure. But, there are a thousand ways around such laws anyhow, particularly when transnational corporate structures are free to “run the table” as we say in billiards.

      Sal Sar

  3. Yep, kill the golden goose. Warren and her kind lack any knowledge of history.

    1. You got it wrong., If we are talking about billionaires, they own the tax-farm called “America” and we are their little geese. Sal Sar

  4. Lizzie Borden Warren
    Took an axe
    Gave her home state
    40 whacks
    When she saw what she had done
    Gave her Country 41.

    Watch the flight of money from T Bills etc now the Communists like poke a haunt us are in charge. When they don’t get squat at that level it will be just like the first income tax. Started at 5% and went to 90% in ten years.

    and Lizzie the Lizard hasn’t yet paid back the money she stole from those people pretending to be Wampum steal some … .more. Dumb broad hasn’t figured out socialism has never worked except to enrich a NEW class of rich

  5. Many moons ago Senator Warren, aka Pocahontas sent out smoke signals.

    Squaw no longer trades for beads, fur pelts, horses, rifles & fire water. Not like Papoose. Pocahontas seeks big wampum. Hang many scalp trophies in lodge from war path.

  6. It relieves politicians of responsibility for uncontrolled spending by fueling a type of class warfare.

    A government that robs Peter to pay Paul can always depend on the support of Paul. George Bernard Shaw

    We have way too many Pauls.

    1. Taxation isn’t robbery.

      Wealth is becoming increasingly concentrated at the top. That’s not healthy for society. About 70,000 households each have a net worth of over $50M, and about 700 households each have a net worth over $1B, out of over 122,000,000 US households total. This tax affects fewer than one-tenth of one percent of households. A 2% tax on the Uber-rich is hardly class warfare.

      1. I think income inequality is a big problem and it grows. But politically speaking, I am not so sure$50 million is uber rich. I think it is fair to call it rich. But not over-rich.

        The law has legs if it only bites billionaires. The law is DOA at the starting level of $50 M. I am sure Warren knows this and I have no clue why she trotted it out in this defective format. I suspect maybe some billionaire somehow made sure she rolled it out with these particulars just so that it would assuredly fail.

        Sal Sar

      2. Taxation isn’t robbery.

        Go back to sleep. We have a natural right to the security of our property. Wealth is the value of our property. Taxing income is rational. Taxing wealth, which is the property left over after the income has been taxed, is double-taxation. Uber-rich is a meaningless term, unless of course you’re trying to stoke class warfare and excite the proletariate to action. Has that ever worked out well for the wealthy or the Paul’s of the world?

        If these taxing schemes aren’t preceded by major reductions in spending, then they are morally unjust government theft.

      3. Instead of looking at wealth disparity one should be looking toward prosperity for all.

        It appears someone would rather have everyone poor than everyone prosperous where some might have more than the rest. A foolish way of thinking but that is how some think. The same individual doesn’t realize that his leftist policy preferences created more wealth for few very rich people while making a lot of middle class poorer. Such is the lack of education that exists in some folk.

      4. “Taxation isn’t robbery.”

        Which income group’s tax monies were used to bailout the Banksters in 2009?

        That was the largest transference of wealth in history, and the people who paid those taxes were given no say in the matter.

        If you don’t think that’s “robbery” you’re living in a fantasy world.

        1. ‘. . . bailout the Banksters in 2009″

          There sure is a lot of misinformation out there about TARP. It was *not* a “bailout” for the banks or other industries. It was a loan (with interest and other obligations). The loans were repaid, and the government came out ahead some $30 billion. TARP was, though, a bailout for some homeowners.

          Incidentally, most of the banks did not want and did not need the loans, but were pressured by the government to take them.

  7. JT might want to read more Rousseau.

    “I have already defined civil liberty; by equality, we should understand, not that the degrees of power and riches are to be absolutely identical for everybody; but that power shall never be great enough for violence, and shall always be exercised by virtue of rank and law; and that, in respect of riches, no citizen shall ever be wealthy enough to buy another, and none poor enough to be forced to sell himself: [1] which implies, on the part of the great, moderation in goods and position, and, on the side of the common sort, moderation in avarice and covetousness.
    “Such equality, we are told, is an unpractical ideal that cannot actually exist. But if its abuse is inevitable, does it follow that we should not at least make regulations concerning it? It is precisely because the force of circumstances tends continually to destroy equality that the force of legislation should always tend to its maintenance. …
    “[1] If the object is to give the State consistency, bring the two extremes as near to each other as possible; allow neither rich men nor beggars. These two estates, which are naturally inseparable, are equally fatal to the common good; from the one come the friends of tyranny, and from the other tyrants. It is always between them that public liberty is put up to auction; the one buys, and the other sells.”

    The “eat the rich” phrase attributed to Rousseau is “When the people shall have nothing more to eat, they will eat the rich.” AFAIK, it doesn’t appear in his writings. The goal is to avoid reaching a point where people are starving.

    Taxing the rich is not eating them.

    2. “allow neither rich men nor beggars”

      If ever there was a perfect example of “a fools errand”, that is it.

      There is no possibility of individual liberty and freedom in any country where some amorphous “State” decides who is considered “rich”.

      You should move to China or North Korea, if that is what you’re looking for. But you won’t find it there, either.

      1. Jesus said the poor will always be with us. So too will the rich. Walworth is right it is a utopian fools errand to eliminate either. Some people will always prosper and some will always do poorly. At best we can mitigate the harm to the rest of us from that dynamic

        But yes indeed income inequality is a real social problem, especially at our level, where billionaires like Jack Dorsey and company are so high that they can presume to ban a President from their particular soap-boxes which have been built on public infrastructure and ought to be considered utilities. They are above the state. The first thing to do to cancel their overweening influence is break up Silicon Valley with antitrust. Taxes are complicated and a harder look to manage.

        Sal Sar

  9. Warren’s tax is as constitutional as any other direct tax. And she knows this basic formula: the top bracket of the most wealthy a) spend the same amount of money no matter what tax policy is, and b) will pay to find ways to escape paying their fair share (and can afford to do it). She has her finger on the reason why trickle on economics doesn’t work now, and hasn’t worked at any juncture. It’s a strategy honed to drain the sugar from economic growth generated by non trickle on growth strategies. It rides the top end of a surge before eventually breaking the incline of an uptrend. End result is the type of economic wreckage left in place at the end of republican administrations.

    Warren is on the right track for sure.

    EB

    1. Warren is on the right track: we need the rich to be taxed to pay for more cages at the US Border for immigrant children, assuming COVID does not kill them first

      Tax the Rich! Designer animal cages for Immigrant children carrying COVID!!!

      – EB

      Scoop: Inside a crowded border patrol tent in Donna, Texas – Axios

      Exclusive photos from inside a U.S. Customs and Border Protection temporary overflow facility in Donna, Texas, reveal the crowded, makeshift conditions at the border as the government’s longer-term child shelters and family detention centers fill up.

      Why it matters: Each of eight “pods” in the so-called soft-sided facility has a 260-person occupancy, said Rep. Henry Cuellar (D-Texas), who provided the photos to Axios to raise awareness about the situation. But as of Sunday, he said, one pod held more than 400 unaccompanied male minors.

      Because the Biden administration has restricted media coverage at housing facilities, images like these offer a rare window into conditions.

      Cuellar, who recently visited a shelter for children, did not tour the Donna facility or take the photos himself. He said the photos were taken over the weekend.

      What they’re saying: Cuellar described the setting as “terrible conditions for the children” and said they need to be moved more rapidly into the care of the Department of Health and Human Services.

      Border Patrol agents are “doing the best they can under the circumstances” but are “not equipped to care for kids” and “need help from the administration,” he said.

      “We have to stop kids and families from making the dangerous trek across Mexico to come to the United States. We have to work with Mexico and Central American countries to have them apply for asylum in their countries.”

      “I have said repeatedly from the very outset a Border Patrol station is no place for a child,” DHS Secretary Alejandro Mayorkas told CNN on Sunday. “That is why we are working around the clock to move these children out of the Border Patrol facilities into the care and custody of the Department of Health and Human Services that shelters them.”

      On MSNBC, he compared the administration’s actions to those of the Trump administration,”We are not expelling children, girls, 5, 7, 9 years old back into the desert of Mexico, back into the hands of traffickers.”

      The bottom line: Facilities are at capacity under coronavirus protocols, and the Rio Grande Valley sector — which includes Donna — has far exceeded even its non-pandemic limits.

      As of Saturday, there were 10,000 migrants in CBP custody overall. Nearly half were unaccompanied minors — thousands of whom had been waiting for more than 3 days in border patrol facilities, according to government data provided to Axios by another source.

    2. Fed policy has been more or less the same since the financial crisis, from Bernanke to Powell. From Obama to Trump to Biden. And Fed policy (endless QE) is a large part if not the largest part of the past year’s rapidly increasing economic inequality. You probably know that EB but here you are taking a swipe at Republicans. The aim should be to get a bipartisan consensus to do something about the problem and not just get caught up in the usual sports style arguments about the favorite home team. Sal Sar

      https://www.cnbc.com/2013/09/19/druckenmiller-fed-shifting-money-to-rich-from-poor.html

    3. “Warren’s tax is as constitutional as any other direct tax.”

      Indeed. Except for the income tax, all direct taxes on individuals by the federal government are unconstitutional. Now, if Congress imposed a tax on the States in proportion to their House of Representative membership (which would essentially follow the Article 1 section 2 formula), the States could (if their Constitutions permitted / didn’t forbid it) impose a “wealth tax” to come up with the money. This would, naturally, cause a flight of the mega-wealthy to small(er) states to minimize the bite.

      1. This is not a problem. Can be structured as a use tax or a property excise tax. Sal Sar

  10. Regardless of Warren’s motivation, here’s what will actually happen:
    Step 1: pass the wealth tax with great fanfare.
    Step 2: quietly extort campaign donations from the rich in exchange for loopholes.
    Step 3: lower the threshold so poor Diogenes pays out of his 401k.

    Don’t believe me? Then explain the income tax code as it stands today.

    I hate the very wealthy because they are betraying everything I love, but I have no illusions about who will be punished. Middle-class 401k’s are slow-moving targets compared to Jack Dorsey’s yachts.

    1. If you really want to tax the rich, reform the income-tax code (again). It forces the rich to start over with their lobbyists (which they hate), and it doesn’t require making a mockery of the Constitution.

    2. Income tax codes should be reformed at least every 20 years to keep the codes honest. We’re overdue.

      1. Very overdue. But very unlikely. Tax policy is difficult and they have a lock on lobbyists, Congresscritters, and reporters. I share your anxiety that whatever the supposed plan, they will adapt it to levy more burdens on those below them.

        One suspects, that when interest rates go up, and a crisis emerges, some will immediately come out with reasons to take a bigger bit out of tax qualified assets like IRAs and 401ks.

        I am for effective taxation and if we can effectively tax billionaires harder, I would support it.

        Here’s a possible rational and effective tax policy: equalize ordinary income and capital gains tax.

        When some people say we have a regressive tax system. Well, it’s not strictly true of income taxes, which are actually progress. However, when you add in payroll taxes and capital gains taxes, it starts to look that way a lot more.

        Sal Sar

        2. I am for effective taxation and if we can effectively tax billionaires harder, I would support it.

          You’re sounding more and more like your namesake. Why are you so quick to seize the wealth in this country and reticent to challenge the spending policies of our government?

          1. There were no billionaires in Kampuchea in the 70s at all, not even the King, I suppose. The nom de plume is trolling to some degree.

            I am not reluctant to change spending policies. I could think of a lot of changes that would be good for us. The current spending is atrocious. It was too much under Donald and the matter of spending money on the COVID bill that was only about 10% COVID related is awful. One suspects that the billionaires find a lot of ways to vacuum up the Congressional spending like they do with everything else.

            That’s just not what we were talking about is all.

            Sal

        1. True, but I’m talking about something more comprehensive that goes more-aggressively after special-interest deductions, etc. Something along the lines the tax reform of 1986.

  11. Income tax is just another way of coveting (and obtaining) thy neighbor’s goods.

    1. Romy, all living things are in competition for resources. Moses’ laws did not change that fact of existence. Sal

  12. There are many facets to wealth taxation issues. Here are just a few:
    First, what is wealth taxation? Taxing total value assets of a person as opposed to income taxation. A wealthy person may have no income in a year yet have tremendous amounts of assets. So there can be wealth inequality as well as income inequality.
    Second, what is the basic moral reasoning behind wealth taxation? Moral philosophers generally try to identify “sources of obligation”. Some rather obvious ones are commitment , promise and contract obligations. When one joins into endeavors that have rules one is bound to obey those rules. Others are obligations that obtain from simply being a human being in a social world. Regardless of whatever rule based associations we have joined, there are basic human rights that cannot be harmed without reasonable justification such as life, liberty, and property and perhaps privacy and non-legally enforced but still immoral harms such as disrespect. Harms may be commissions (actively doing harm) or omissions (not preventing harm). Redistributional taxation addresses harms of omission. (For the most part, some might say that the rich have exploited the poor and thus taxation would be a penalty for that harm, but many would say that even if there was no exploitation involved , not helping the poor when you have the means to do so is evil. John Rawls famously called this “background justice”.) Everyone agrees that a person who slams the door upon finding a baby in a basket on their front porch would be guilty of a crime and claims of not actively harming the baby will not work. However, the level of taxation generated safety net guarantees is controversial when the examples are less extreme. Most people say that helping the truly helpless is obligatory if one has the means to do so with causing unreasonable harm upon themselves. However, the personal responsibility of those not disabled plus the need to provide incentives (both positive rewards and negative disincentives)for self reliance usually cause conservatives to support lower maximum welfare assistance. However, the wealth tax supporter will say to the wealthy: “you owe the poor even if you have not exploited or stolen from them and even if you are not making much income.”
    I disagree with wealth taxation for the reasons Prof Turley mentioned but also the following: A wealth taxation voted in now has to be retroactive based since it is not purely income related. That is it changes the rules for how much one owes the government after the fact of the generation of wealth. Income taxes whatever their merits and weaknesses are at least not retroactive. Wealth taxes would be close cousins of “bills of attainder”, laws singling out certain individuals, in this case based upon past events and situations. Secondly, wealth taxation would include non-transactional increases of one’s wealth. Incomes are usually transactional and investments are extended transactions. It is easy to quantify transactions since they are monetary based for the most part. But one’s thriftiness and taking care of their property and other tradeoffs one makes with himself or herself profoundly affect their wealth status. Think of other goods like health and education. A huge percentage of one’s health depends upon behavior (not smoking, not over eating, exercising, not getting involved with illegal drugs) and a huge percent of one’s knowledge and wisdom comes from their own initiative (like reading , thinking , writing and efforts to expand one’s experiential horizons) Should we demand the extremely healthy to volunteer more of their time and demand that the very wise concentrate on problems they may not want to concentrate on? Taxation based on transactions (like income and sales taxes) lends itself much easier to questions of fairness and justice than wealth taxation.

  13. “a 2 percent annual tax on the net worth of households and trusts above $50 million and a 1 percent surtax on the net worth of those above $1 billion” is NOT “soaking the rich.”

    As for increasing the size of the IRS, that $100 billion investment in IRS capacity could generate a $1.4 trillion return –
    https://www.nytimes.com/2021/03/20/opinion/sunday/unpaid-tax-evasion-IRS.html
    JT ignores the extent of tax evasion, and the inability of the IRS at its current size to address it.

    White collar crime has a significant impact on the country. We should address it.
    Big Dirty Money is good book on white collar crime –
    https://www.kirkusreviews.com/book-reviews/jennifer-taub/big-dirty-money/

    1. Where is the bulk of that type of money? It is in the US economy. $1.4Trillion removes $1.4 Trillion from the economy.

      Along with that it creates tremendous inefficiency that costs the economy dearly.

      Other countries have learned from experience. However, we need to analyze how so much money was accumulated by persons like Jeff Bezos. Could leftist ideas have accelerated his personal wealth? Absolutely, but the left doesn’t want to use intellect to solve the problems. The left prefers to use their emotions. That is why there is a lot of whining on the blog.

      1. Bezos is a member of the billionaire party. They seek to own or rent Republicans and Democrats, not “belong” to them. Sal Sar

        Now here’s an example of 2.5 Miillion he gave to what? Gay marriage initiative. Just an example. he’s also fought income taxes on high income taxpayers, apropos of this article

        https://www.reuters.com/article/us-usa-gaymarriage-bezos/amazons-jeff-bezos-wife-make-2-5-million-donation-for-gay-marriage-idUSBRE86R01320120728

        1. “Anonymous the Stupid, you seem to think the quantity of Stupid comments makes your comments smarter. It doesn’t. You remain Anonymous the Stupid no matter how many comments you make.”

          Many of them seek oligarchy or outright fascism. The believe in rule by the elite and will pay our leaders whatever they wish in order to get our leaders to do their bidding.

    2. If you really want to eliminate tax evasion, you MUST switch from an income tax to a value added tax. Tax policy people have known this for decades. Congress-critters know it too. They are not interested in either preserving a legit tax base, nor efficiency. They are interested in re-election. In the area of tax policy, democracy shows its worst side, and a complex democracy controlled by plutocrats is even worse.

      The amount of fakery, misdirection, and misinformation which comes from our press is incredible, massive, huge. The billionaires control the press, they can control who gets reelected and how, etc. They could care less about the United States as a viable government in the long run. The billionaires have NO INTENTION of ever paying back the US debt. They are going to ride our country like a beast of burden and should it show signs of collapse, they WILL divest ahead of time.

      Warren’s plan seems to grasp this truth to a degree. But she has cleverly cast the net too wide, thus ensuring a big enough base of low level “Rich” people who will oppose it– thereby protecting the billionaires. This is a transparent Dead on Arrival proposal. It’s like a soldier who has the enemy in his sights and intentionally misses. Always ask why.

      Sal Sar

      1. People who have over $50M net worth aren’t “low level” rich. To be clear, some very wealthy people support being taxed more.

        1. We know that Buffet has told many self serving lies over the decades. This was just one.

          You know that 50 M goes into 1 B 2o times right? at 50 M they are 1/20 the size of a billionaire.
          If you are aiming to get at the wealth inequality problem, you go for the top, not the lower end of that spectrum. And it is “low level rich” by some metrics. Let’s get into that.

          For example. Can rich people afford security teams? I mean to me that matters. What is worth paying for if not security?

          How much does a full time 24/7 security team cost? Figure $150,000 a year just for people who are not that qualified.

          Who’s got that kind of money to throw at security? At $50 M, maybe, especially if you’re a high profile movie star. For those who are not, no way. It’s too much. Most people at that $50 M level who live in obscurity pay for no such thing. They would laugh at the idea. It’s not necessary and it’s pretty expensive even for them.

          For guys like Mikey Bloomberg, he can hire an army of guards every year and pay for it.

          Now let’s go down to that next tier and take the same proportion lower than it. What’s 1/20 of $50 M? $2,500,000.

          Now compare someone with an asset size of $2,500,000 to $50 M, it’s obvoius, $2.5 aint much to the guy with $50 M. They are not even in the same ball-park. But move that up to the higher tier, and now you can get an idea of how much higher a billionaire is than a $50 M person. A lot, lot, lot higher.

          If we spent much time on math, we would understand, whatever we got to complain about the so-called “Rich” at $50 M, their wealth PALES by comparison to the billionaire level.

          At a level of $2.5 million you have a successful dentist or doctor in flyover. Who can’t afford to quit working any time soon because college for the kids.

          At $2.5 million in a coastal area, like Palo Alto, you can rent what?

          Here’s a story and the Palo Alto listing is $1 M and size 636 square feet. You know how small that is?

          https://www.insider.com/18-of-smallest-homes-in-us-cost-1-million-dollars#nearby-and-similar-in-size-this-san-jose-home-is-much-more-expensive-14

          My point is, Warren knows these figures just as well as me. The plan is DOA at the level of $50 M. Big disappointment that she chose that figure for the start of it.

          Sal Sar

          PS I hope i got these figures wrong it’s a lot of zeroes to juggle!

          1. More importantly, in terms of how much OPPOSITION the plan arouses, at the billiionaire level they got like 800 people who are super motivated against it.

            At the $50 M level? A lot, lot more. 70, 540 what i just read. That is a whole lot more people motivated to stop it, and the plan is hence DOA.

            Seems pretty dumb to me to go to the trouble of this exercise and then stymie it from the get-go by biting off more than she could chew.

            Sal Sar

  15. The inefficiency of a wealth tax alone should make sensible people stay away from such a tax. $100 Billion IRS expenditures is like digging a hole and burying money. How will the wealthy react? Will wealth come to the country or stay abroad? Will the wealth go offshore. Will wealthy companies expand and go public? When they are not public one doesn’t know their value. How do people assess wealth and what vehicles will they use to hide wealth.

    Another crazy tax by another left wing Democrat. What is really needed is a reduction in spending and a balanced budget. Cut the pay of our legislatures and their staff proportional to our debt.

    1. I would entertain the idea if it started at a billion. She cast the net too wide, which almost ensures that it will not fly. I suspect she fully understands that. Cunning, deliberate self-sabotage. Sal Sar

      1. She cast the net all wrong Sal.

        Why do some people get rich quick and why do some of the rich get richer quicker. Government is playing a big hand in all of this so the end product will be the same no matter how the taxes are set. We have seen this over and over again. Basic incentives are at work and no one is looking at them.

        1. In terms of the value of assets in this country, our stock market is broken. There is no realistic price discovery because of constant subrosa manipulations in markets by the FED and by the head of the FED jawboning markets every time they slip a little. Who benefits from that? Mostly the billionaires that’s who. Oh my little portfolios are up too but it doesnt really matter much to me, because if I retire the needle won’t have moved much either way. Now if I was Mark Zuckerberg that would be a different story.

          Why the ten year bond rate went up a little and Silicon Valley slipped and they had a cow over it. The thought that they might have to pay more interest and actually get more serious about delivering profits instead of supposedly endless growth sent an earthquake tremor through the growth investment addicts. That was not too many weeks ago if you recall.

          The FED is appointed and the people who get appointed are pretty much all MMT theorists now, Bernanke then Yellen then Powell. Not a shade of difference. This keeps the current dynamics of a high dollar and deindustrialization moving. Wall Street and Silicon Valley benefit and we suck wind.

          Tax policy can fiddle with that a little bit, but, sure, there are big things in place that seem pretty well fixed/ And yet!

          A year ago who would have thought that the “30 days lockdown” would last for 365? Apparenlty things are not as “fixed” and certain as we thought years ago

          Sal Sar

          1. Sal, I am not quite sure what you are saying or if you understand what I was talking about.

  17. I wonder if Warren’s wealth tax will exempt her and her husband who have made a lot of $$$$ in Real Estate/Fed Loans? She is a person of the commoner she drinks A Beer?????wink wink Liberal Elite

    1. She doesn’t want to be exempted.
      She doesn’t want her fellow members of Congress to be exempted.
      She doesn’t want Biden and former presidents to be exempted.

      1. “She doesn’t want to be exempted.”

        Are you really this naïve?

        Warren will never want for anything the rest of her life. So of course she doesn’t “want to be exempted”. Because whether she was or was not exempted, her standard of living will never change. She will always live in the style to which she has become accustomed.

        As opposed to the millions of people who have lost their jobs and businesses as a result of the scamdemic that her and her ilk helped perpetrate.

        When was the last time you heard Cortez complaining about how she was going to afford an apartment in DC?

        It’s a big club, and you ain’t in it.

  18. I can just hear the Tax Attorneys and CPAs sharpening their pencils. I think the countries that have strong Asset Protection laws will benefit from Lizzie’s money grab. She might say “it is only 2%” but as most people know it is never enough for politicians, they always want more.

    1. “it is never enough for politicians, they always want more.”

      What nonsense. Politicians recently gave the wealthy a huge tax break.

      1. “Politicians recently gave the wealthy a huge tax break.”

        You seem to have that backward. It is the individual’s money not the politicians.

        Look at Bezos who made ~75 Billion more dollars this past year, much of it off of government policy, while the government destroyed his competition. That meant a huge number lost their incomes and had to be supported by the tax payer.

        You seem fine with everything that destroys economies. It doesn’t make sense but you can come up with nonsense phrases like you did above.

        1. Allan says Blah, blah, troll, troll, blah.
          Allan wants to be able to troll with impunity.

          1. Anonymous the Stupid, are you admitting you don’t know what has happened to many small businesses? What you are doing is being Stupid and trolling. How is the following trolling?

            You seem to have that backward. It is the individual’s money not the politicians.

            Look at Bezos who made ~75 Billion more dollars this past year, much of it off of government policy, while the government destroyed his competition. That meant a huge number lost their incomes and had to be supported by the tax payer.

            You seem fine with everything that destroys economies. It doesn’t make sense but you can come up with nonsense phrases like you did above. >>”Politicians recently gave the wealthy a huge tax break.”

    2. Karen Ann, Sweden could explain it to our leftists, but our leftists aren’t Swedes. Our fake progressives are 30 years behind the Swedes and will be 50 years behind in ten years.

        1. You’re giving Karen another example that undermines her claim “it is never enough for politicians, they always want more.”

        2. Ha Ha I been reading Simon Black for years. So far I still don’t have enough money to make any use of it. Maybe someday “Costa Rica here I come” but not likely

          I hate fact checkers who are usually full of krap but this one helps dig deeper into that particular question of what European countries have done away with wealth taxes and why

          https://www.politifact.com/factchecks/2019/may/10/joel-griffith/some-countries-ditched-wealth-taxes-what-might-mea/

          consider that most of us are paying a wealth tax already– whenever we pay our property taxes on our homes or business real estate. That is precisely how a wealth tax operates.

          Consider one of the richest institutions in the US that gets a big pass on real estate taxes: UNIVERSITIES

          Just imagine if Harvard had to pay as much property taxes on their real estate as the local liquor store owner who owns his own shop does. It would fetch tens, hundreds of millions in one year. But, they continue to masquerade as a “nonprofit.”!

          Sal Sar

            1. Prester, there is actually a small tax on big endowments. See below for a modest step in the right direction for these massively powerful institutions. Sal Sar

              “The 2017 Tax Cuts and Jobs Act (TCJA), imposes a new tax on a small group of private nonprofit colleges and universities. Institutions enrolling at least 500 students that have endowment assets exceeding $500,000 per student (other than those assets which are used directly in carrying out the institution’s exempt purpose) will pay a tax of 1.4 percent on their net investment income. The $500,000 threshold is not indexed for inflation. A precise understanding of the tax awaits finalized Internal Revenue Service guidance, but Treasury estimates that only about 40 institutions meet these criteria.”

        3. Diogenes, progressives don’t learn from experience. It’s amazing how they can only deal with one thought at a time.

          1. You uncovered Anonymous the Stupid’s chicanery of pretending to be two different commenters having a conversation. My hat’s off to you. Did you deduce this fraud from the one-thought-at-a-time nature of his/her/its faux dialogue?

            1. Diogenes, one Anonymous the Stupid like him seems impossible yet Anonymous the Stupid exists. If one seems impossible two are impossible.

              He tracks himself and when he gets into an especially irate state or needs a pat on the back he invents them. The dialogue and pattern are revealing but most of all that is his nature. He accuses others of all the bad things he does.

              Most of all he is a liar and will post things even when he knows they aren’t true.

        1. Low-income Swedes pay much higher income taxes than low-income Americans (who pay 0%). The Swedes believe everybody should pay, not just the rich. Just try and sell that idea to fake progressives. You guys are not like Swedish liberals. You’re like Greek communists.

          1. Don’t try to tell me about myself when you’re clearly imagining things. I have no problem taxing people with a low income (which of course we do anyway, through things like sales tax) as long as people are paid a living wage.

            2. One problem with a “living wage” is that it will destroy part time jobs and low end jobs for people who need them to supplement other sources of income. Like teenagers, second spouses entering work force, elderly.

              Also it will do nothing to affect what is paid to contractors.

              In fact the billionaires love this “living wage” illusion stuff. I will explain why. First of all, they lie constantly. They could care less about workers. But they can fool people!

              Moreover,

              1.. they WANT to get rid of low income jobs altogether. TECHNOLOGY! AI! ROBOTICS! All stuff that THEY own and we would have to rent or buy– FROM THEM. The COVID played into their hands on that account, for sure.,

              2. everybody will still be able to hire “CONTRACTORS” which will still be available to do certain jobs cheaply. Ah but the contractors will have to pay living wages to their employees and just pass it on to the employers of contract wages? Ah well maybe in some places but it won’t take long how to figure out how to get around this. Small business self-employed contractors will be the way. So as employers of labor by wages or contract means, billionaires will not be bothered by the effects. So they get the free PR with no downside, see! They TRICKED US AGAIN!

              I have sympathy for people who want to encourage wage growth, a lot actually., But minimum wages laws generally don’t achieve the desired effect.

              On the coasts, they might help more than they hurt, but in flyover here– it would destroy jobs. This is why the Democrat from WV opposed it.

              Sal Sar

  19. The social consequences are almost unbelievable.

    Is Warren trying to bring on an American version of the French Revolution?

    It is almost as if the Dems want to destroy our country.

  20. Warren:. Talk with your hands. That’s why you couldn’t beat Biden. You are obnoxious!

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