This is the moment to shine for Elizabeth WarrenElizabeth WarrenLobbying world Sanders open to supporting primary challengers against Manchin and Sinema Warren dodges on whether Sinema, Manchin should be challenged in primaries MORE. The crowded field of Democratic presidential candidates is suddenly being cleared for her by a combination of baggage and fate, as Joe BidenJoe BidenBiden says he didn't 'overpromise' Finland PM pledges 'extremely tough' sanctions should Russia invade Ukraine Russia: Nothing less than NATO expansion ban is acceptable MORE faces fallout from his Ukraine connections and Bernie SandersBernie SandersThe Hill's Morning Report - Presented by Facebook - Schumer tees up doomed election reform vote Schumer prepares for Senate floor showdown with Manchin, Sinema White House to make 400 million N95 masks available for free MORE deals with a heart condition.
From stem to stern, the Massachusetts senator has marketed herself as the candidate with all the issues thought out. For every major problem facing the United States, her campaign slogan says she “has a plan for that.” Warren is running on a myriad of big federal government programs including Medicare for all, student loan forgiveness, and free college. Her plan to pay for these lofty promises includes a wealth tax of 2 percent on fortunes above $50 million and 3 percent on fortunes above $1 billion.
To many voters, her plans sound attractive, and her years in academia lend to her pitch. She is articulate and crafty enough to crib off Sanders, while arguing that she just wants capitalism with a human face. In reality, however, the former Harvard professor is hoping you will not do the math yourself when it comes to her grandiose pitch. Almost every element of her plans would drive discourse to the left, while weakening our political and economic systems to make them susceptible to crony capitalism.
Even the centerpiece of the Warren platform is obviously unworkable. A wealth tax on fortunes above $50 million is touted as the key funding mechanism for a plethora of new programs. But European nations have attempted numerous such wealth taxes, and none have been successful. Since 1990, the number of European states with such a levy on the rich has fallen from a dozen to three including Switzerland. Between 2000 and 2012, the burdensome wealth tax in France led to 42,000 millionaires fleeing the country. The nation ultimately scrapped the impost in 2018.
While a wealth tax in the United States is likely unconstitutional to begin with, it is certainly unenforceable in the way that Warren desires. Look no further than what happened in 1990, when President Bush caved to Democrats in Congress to raise taxes on luxury goods. Commonly referred to as the yacht tax, it implemented excise taxes on items associated with the wealthy such as cars, jewelry, and private jets.
When the levy passed, Congress predicted it would bring in $31 million during the first year, but the actual haul was half of that. Consumption of such high end goods fell and prices soared. The most tangible results of the tax were most devastating for middle class workers, as nearly 10,000 jobs were destroyed in the luxury goods industry, and the less than $18 million in new tax revenue was offset by over $24 million in lost income tax and unemployment benefits for the newly out of work employees. The taxes were slowly and quietly repealed in the 1990s and early 2000s.
But perhaps the biggest problem with the Warren wealth tax is that it is estimated to bring in an average of less than $3 trillion over a decade, which is less than 10 percent of the total cost of her Medicare for all plan. Warren will not state the obvious that in order to pay for any of her policy proposals, it also requires a massive tax increase on the middle class.
Warren also proposes a frightening Office of United States Corporations through her Accountable Capitalism Act. Under this plan, workers must represent 40 percent of corporate boards of companies worth more than $1 billion. It also institutes new strict controls on political spending and requires a corporate charter approved by the federal government. This plan is Orwellian. The idea of government control of private industry is after all among the textbook definitions of fascism and its concept of corporatism. That means charters to do business could be revoked.
Even though her policies will not actually work for you and me, they will work for the bureaucrats in Washington. An exploding federal government and tax service to collect revenue will be a fat bottom dollar for lobbyists. Similar to the wealth taxes in European nations before they were repealed, rich Americans will certainly ask Congress for exemptions to this levy.
Replacing private institutions with leviathan government labyrinths will only serve to aid those with enough money to either manipulate the system or sidestep it altogether. When Warren tries to give the wealthy a hundred whacks and comes up dry, do not be surprised when you are paying the taxes she promised you that Jeff Bezos and Bill Gates would.
Kristin Tate is a libertarian writer and an analyst for Young Americans for Liberty. She is an author whose latest book is “How Do I Tax Thee? A Field Guide to the Great American Rip-Off.” Follow her on Twitter @KristinBTate.