Late in September, Sanders released the details of his plan to impose an annual tax on wealth.
His goal is to go after the “extremely” wealthy, those in the top 0.1% of Americans, based on net worth.
For individuals, that starts out at a 1% tax on those with $16 million – $32 million for a married couple.
The tax increases step by step until it reaches 8% on fortunes worth $5 billion – $10 billion for a married couple.
Bernie wants the IRS to assess the net worth of these Americans every year. The tax would also apply to assets sold or transferred during the year.
Two economists, Emmanuel Saez and Gabriel Zucman, claim this proposed wealth tax would raise $4.35 trillion in the next ten years.
Senator Elizabeth Warren’s Wealth Tax Proposal – the “Ultra-Millionaire Tax”
Senator Warren’s plan is much simpler. It starts with a 2% tax on everybody with $50 million.
At $1 billion, the tax increases to 3%.
Saez and Zucman claim this wealth tax would raise $2.75 trillion in the next ten years.
The Rest of the Field
Beto O’Rourke and Pete Buttigieg say they support the concept of a wealth tax, but haven’t come up with their own plans.
On the other hand, candidate Andrew Yang says a wealth tax would be “somewhere between problematic and disaster.” He recognizes implementing the plans would be difficult, but, sadly, doesn’t come out against the concept.
Wealth is Not Simply a Stack of Dollars We can Just “Redistribute”
Profitable companies are complex organizations with many moving parts that must worth together. When the media tells you Bill Gates, Jeff Bezos, or Warren Buffett is the “richest” man on Earth, it’s silly.
A reporter takes the number of shares they own in their companies and multiplies that by the stock’s current market value. As though Jeff Bezos could withdraw $200 million from a nearby ATM machine any time he chooses.
If any company insider sells more than a small fraction of the shares they own, it would create a massive sell-off in the stock market.
The Wealthy are Wealthy Because They Own Businesses
According to The Wall Street Journal, 40% of their wealth comes from private businesses.
Who can say how much a private business is worth? Nobody, until it’s sold.
Therefore, the government would have to hire a large number of accountants and lawyers to calculate the net worth of America’s ultrarich.
And America’s ultrarich would hire a large number of accountants and lawyers to argue with the government’s accountants and lawyers.
If nothing else, a wealth tax would greatly benefit accountants and lawyers.
Europe’s History of Wealth Taxation
Back in 1990, twelve countries in Europe had a wealth tax.
Today, only three European countries still impose a wealth tax: Norway, Sweden, and Switzerland.
The others, including France and Germany, found their wealth taxes cost their economies more money than they raised. How to value assets, such as private businesses was a major issue. Also, the best and brightest entrepreneurs fled, taking their money and their skills with them – and the jobs they’d created.
Not surprisingly, wealth taxes also encouraged a lot of fraud.
No Place to Run, No Place to Hide
In an article published by The Washington Post, those two economists Emmanuel Saez and Gabriel Zucman gleefully write they won’t repeat Europe’s mistakes.
See, the United States is one of the few countries in the world that demands its citizens pay taxes on ALL income, no matter where they live or where they earned the money.
Therefore, wealthy Americans can’t legally escape a wealth tax just by moving to another country. The elite bureaucrats who run the government already believe they own us no matter where we live.
What’s worse, they think the whole world must fall in line. The IRS already demands all banks in the world report financial information on Americans to them.
Say you’re an American citizen who lives and runs a business in Brazil. You must still pay taxes to the IRS even though your income is all Brazilian – and your Brazilian bank must report to the government (to the US government, not Brazil’s) how much money you keep in it.
Therefore, it’s likely a wealth tax would push more Americans to hide cash in the few remaining banks that don’t cooperate with the IRS.
How long would it take Sanders or Warren to call on the Marines to invade those off-shore Caribbean tax havens?
Theft by Government?
However, I hate to argue against an American wealth-based simply on how impractical it would be or on how it would drag down the economy – even though that’s true.
Even if it were practical, a wealth tax is simply theft by another name, and it’s just as immoral.
