The tax bill for all of Sanders' and Warrens' "free" stuff
Both Sens. Bernie Sanders and Elizabeth Warren have proposed multi-trillion tax hikes on the nation's "wealthy" individuals. The intent of these taxes is, naturally, to pay for all the "free" stuff they've promised voters on the Demcoratic campaign trail.
But what would happen if either Senator's wealth tax were implemented? The Tax Foundation ran the numbers and found both ideas would cause substantial economic harm. Here are the main points from their study:
Wealth taxes on ultra-wealthy households have been proposed by Democratic presidential candidates to fight against inequality and raise extra revenue but there is substantial uncertainty about how much revenue can be raised.
Comparing wealth taxes to income taxes shows how seemingly low rates on wealth equate to high income tax rates.
Wealth taxes in European countries have had disappointing results and many have been phased out.
A wealth tax would face serious administrative and compliance challenges due to valuation difficulties and tax evasion and avoidance issues.
Using the Tax Foundation’s wealth tax model, and after factoring in the macroeconomic feedback effects, we estimate that Sen. Elizabeth Warren’s proposal would raise about $2.2 trillion and Sen. Bernie Sanders’ plan would raise $2.6 trillion over the 10-year period from 2020-2029.
Warren’s wealth tax would reduce long-run GDP by 0.37 percent, while Sanders’ plan would decrease it by 0.43 percent. Given that the model assumes an almost completely open economy with highly efficient international capital markets, the wealth tax also could have dramatic short-run effects—including a more than doubling of the trade deficit.
A wealth tax would induce foreign inflows of hundreds of billions of dollars a year to replace reductions in U.S. savings, which would cause international investors to replace home-grown billionaires as owners of capital.
Using the tax code to punish success? And hurt everyone else along the way? Yup, that seems to be the intent of the Sanders-Warren tax plan.