The Washington Post editorial board cautioned against Sen. Elizabeth Warren's (D., Mass.) wealth tax plan in a Sunday editorial.
In a piece titled, "Elizabeth Warren wants a ‘wealth tax.’ It might backfire," the Post editorial board argued that Warren's proposal would not be the best way to tackle income inequality in the country.
The Post writes:
It is questionable, though, whether a flat annual tax on wealth is the best way to tackle the inequity and inefficiency associated with concentration of wealth. Problems of implementation abound, starting with pricing non-publicly traded assets such as land or rare antiques. The tax would create a huge incentive for tax avoidance among a segment of society well able to afford accountants and lawyers. The authors of the proposed wealth tax would bolster enforcement by charging people worth more than $50 million to renounce their citizenship, which conveys a certain authoritarian odor. This country has prided itself as a destination for immigrants with great ideas for creating wealth, not as a place that bars the exits to anyone, rich or poor.
Warren is one of the many candidates running for the 2020 Democratic presidential nomination and appears to have staked out the most progressive position on taxes so far. In a fundraising email, Warren proposed a "Ultra-Millionaire Tax" on individuals with a net worth over $50 million. She and her advisers say the tax would generate $3 trillion over 10 years in new taxes.
"That’s why today I’m proposing a tax on the wealth of the richest Americans," she wrote. "It will only affect the tippy-top 0.1% of the wealthy, those with a net worth of over $50 million. I’m calling it the "Ultra-Millionaire Tax," and we can use the significant revenue it creates to start rebuilding our middle class."
The proposed measure would tax individuals with a net worth from $50 million to $1 billion at a rate of two percent while individuals with a net worth over $1 billion would be taxed at three percent.
For evidence that the tax is a bad idea, the Post cites a 2018 Organization Economic Cooperation and Development (OECD) report, which showed eight of the 12 European countries that had wealth taxes in 1990 had repealed them. France repealed their tax in 2018.
Instead the Post suggests Warren should target capital income and inheritance.
"The OECD report suggested an optimal system would target capital income and inheritance of wealth, which could be done here by reducing the current code’s favorable treatment of capital gains and eliminating the huge break for profits on the sale of inherited stock, while putting some teeth back into the estate tax," the Post writes. "That would discourage what’s most contrary to American ideals, dynastic wealth accumulation, while encouraging what’s most consistent, getting rich on the merits."
Nobel Prize–winning economist Robert Shiller said Warren's proposed "wealth tax" is probably a non-starter and could hurt her chances.