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Warren’s ‘Ultra-Millionaire Tax’ Is a Total Strike-Out

October 22, 2019

October is here, which means Americans are gearing up for two hallowed traditions: postseason baseball and political primaries.

October is here, which means Americans are gearing up for two hallowed traditions: postseason baseball and political primaries. Both contests (the World Series and the race for the 2020 Democratic presidential nomination) promise to be full of suspense, shenanigans, and splendor.

This year, the Boston Red Sox, the defending World Series champion, will not be participating in baseball’s fabled playoffs. Bostonians do, however, have a viable contender in the Democratic presidential contest: Sen. Elizabeth Warren (D-MA).

Warren, also known as Pocahontas, is running on an ultra-progressive platform. In baseball terms, one might say Warren is swinging for the fences and hoping to hit a liberal (not literal) grand slam. In baseball, there are two primary offensive strategies: small ball (incrementalism) and long ball (all-or-nothing). This analogy also fits nicely into the political arena. In general, candidates can run on incremental changes (small ball) or all-out fundamental changes (long ball).

So far, Warren’s campaign has embraced long ball as its strategy. For example, Warren took a giant swing earlier this year when she unveiled her “Ultra-Millionaire Tax” plan. According to Warren, “A two-cent tax on the great fortunes of more than $50 million can bring in nearly $3 trillion to rebuild America’s middle class. … It’s time for the rich to pay their fair share.”

Sounds like Warren is definitely trying to knock her tax “pitch” out of the park. However, before she is allowed to round the bases and step on home plate, it is time for an umpire to judge the balls and strikes of Warren’s tax proposal.

First up to the plate is Warren’s contention that the rich don’t pay their fair share of taxes. Before we make the call, consider these facts from the Tax Foundation’s federal income tax report for 2016 (the most recent available data):

  • “The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).”
  • “The top 1 percent of taxpayers paid a 26.9 percent individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.7 percent).”

In other words, the federal government already takes a disproportionate share of total income earned by productive, hard-working, “rich” Americans. Shame on Pocahontas for ridiculing the rich as being derelict taxpayers when the exact opposite is true.

Strike one.

Next up to bat, Warren states, “Our tax code focuses on taxing income, but a family’s wealth is also an important measure of how much it has benefitted from the economy and its ability to pay taxes. … That’s why we need a tax on wealth.” This seems a bit high and outside of the Constitution’s strike zone.

According to the Mercatus Center’s Andrea O'Sullivan and Christian McGuire, “The Constitution explicitly forbids Congress from levying a ‘capitation, or other direct tax ... unless in proportion to the census or enumeration herein before directed to be taken.’ In other words, direct taxes have to be proportional to state population—something that certainly wouldn’t be the case with Sen. Warren’s wealth tax, which would affect relatively rich states disproportionately.”

Warren’s misguided tax is worse than a wild pitch. It violates the rules of the game. Ever hear of double taxation? Apparently, Pocahontas has not.

Strike two.

Okay, Warren is down in the count (0-2). This does not mean, though, that her plan is doomed to fail. She still has one more strike before she must head back to the dugout. Aside from its lack of necessity (strike one) and its unconstitutionality (strike two), is it even possible to implement?

Once again, according to Warren, “All assets are included in the net worth calculation, which will produce more revenue and reduce opportunities for avoidance and evasion.” On this pitch, Warren misses by a country mile.

Apparently, Warren believes every household with a net worth near $50 million is actually going to tally up all of their assets accurately and timely every single year so they can give the government money that has already been taxed. This is ludicrous. Not only would these families take all sorts of measures to avoid paying this tax (ahem, foreign banks), it would be totally impossible for the Internal Revenue Service to ever enact.

Strike three. You’re out. Grab some bench, Pocahontas. Game over.

Well, New Englanders, at least there’s always football.

[Originally Published at Townhall]

Article Tags
Taxes Government Spending
Author
Chris Talgo is editor & research fellow with The Heartland Institute