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Elizabeth Warren’s Tax Plan Would Bring Rates Over 100% for Some
Wall Street Journal ^ | November 15, 2019 | Richard Rubin

Posted on 11/15/2019 5:30:43 AM PST by karpov

Democratic presidential candidate Elizabeth Warren has unveiled sweeping tax proposals that would push federal tax rates on some billionaires and multimillionaires above 100%.

That prospect raises questions for taxpayers and the broader economy that experts are starting to ponder: Under which circumstances would taxpayers have to pay those rates? How might that change their behavior? And would investment and economic growth suffer?

Potential tax rates over 100% could result from the combination of tax increases the Massachusetts senator proposes for the very top tier of investors. She wants to return the top income-tax rate to 39.6% from 37%, impose a new 14.8% tax for Social Security, add an annual tax of up to 6% on accumulated wealth and require rich investors to pay capital-gains taxes at the same rates as other income even if they don’t sell their assets.

Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.

The rate would vary according to the investor’s circumstances, any state taxes, the profitability of his investments and as-yet-unspecified policy details, but tax rates of over 100% on investment income would be typical, especially for billionaires.

“It’s just a continuing laundry list of proposals that just keep heaping on,” said Robert Gordon of Twenty-First Securities Corp. ...

...

Beyond the estimated 75,000 households that would be hit by the wealth tax, Ms. Warren’s capital-gains plan would transform investing rules for the top 1%—about 1.5 million households.

(Excerpt) Read more at wsj.com ...


TOPICS: Business/Economy; Front Page News; News/Current Events; Politics/Elections; US: Massachusetts; US: New York; US: Vermont
KEYWORDS: berniesanders; devalpatrick; elizabethwarren; fauxahontas; getshorty; incometaxes; massachusetts; michaelbloomberg; mikebloomberg; newyork; slingingbull; taxcutsandjobsact; taxes; taxreform; tcja; vermont; warren
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The article later mentions that for 1.5 million household (the "evil" 1%), investment income would be subject to a 39.6% income tax rate, the current 3.8% Obamacare investment income tax, and a new 14.8% Social Security investment income tax, which adds up to 58.2%. On top of this would be any state and local income taxes.
1 posted on 11/15/2019 5:30:43 AM PST by karpov
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To: karpov

That’s insane...you can only have 100% of anything


2 posted on 11/15/2019 5:32:17 AM PST by The Louiswu (MAGAa)
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To: karpov

I am of the opinion that the US ... if we continue to maintain an income tax ... must establish a minimum and maximum tax rate.


3 posted on 11/15/2019 5:32:59 AM PST by taxcontrol (Stupid should hurt - dad's wisdom)
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To: karpov

This Rat Bitch is totally out of her mind.....why invest...why work....why live???


4 posted on 11/15/2019 5:33:31 AM PST by mastertex
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To: The Louiswu

Not in the mind of the typical dim thief politician. 100% is just the beginning to them.


5 posted on 11/15/2019 5:33:41 AM PST by wally_bert (Your methods were a little incomplete, you too for that matter.)
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To: The Louiswu

Math is hard.


6 posted on 11/15/2019 5:35:25 AM PST by Bitman
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To: karpov

What a genius


7 posted on 11/15/2019 5:36:02 AM PST by yldstrk (Bingo! We have a winner!)
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To: The Louiswu

That’s the point. She wants to make it look like she’s only taking 39% of “current” income, but she wants to steal from the safe that holds the accumulated income as well.


8 posted on 11/15/2019 5:36:25 AM PST by RightFighter (This space for rent)
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To: karpov

A 100% net tax relative to income is easy to see without a lot of numbers.

Suppose one is subject to the 6% wealth tax, but invests conservatively in 5% rate tax exempt municipal bonds.

On $1000, the income would be $50; the confiscation would be $60. Presto: 120% tax rate.

But, that mixes the penalty on principal, which is confiscatory, with the penalty on income, which is just “tax”.


9 posted on 11/15/2019 5:38:41 AM PST by Pearls Before Swine
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To: karpov

SPJNK.


10 posted on 11/15/2019 5:38:45 AM PST by carriage_hill (A society grows great when old men plant trees, in whose shade they know they will never sit.)
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To: karpov
THey don't understand the law of diminishing returns, and if the potential reward isn't worth the risk, or if the payout isn't worth the time and effort to be put in, then it won't happen.

The only upside would be how many Hollywood celebrities only do movies every other year and film them all between December and January to split up their incomes. Even after that, they'd probably lose 90% of their royalty checks if they worked on anything else.

(If I have the anecdote correct, Reagan turned down a role in a movie once because he'd only get to keep about 10 cents on the dollar for what they were willing to pay him. He might've been telling that story about another actor though. I don't remember the whole thing.)

11 posted on 11/15/2019 5:39:02 AM PST by Tanniker Smith (Rome didn't fall in a day, either.)
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To: taxcontrol

Yes, we need an Alternative Maximum Tax no higher than 30%.


12 posted on 11/15/2019 5:40:09 AM PST by Mr. Jeeves ([CTRL]-[GALT]-[DELETE])
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To: karpov

Won’t happen, but boy would it cause a stir if the response from one of the “rich” Warren blather about would be the same as the response as the Mel Gibson character in the movie “Ransom”.


13 posted on 11/15/2019 5:40:35 AM PST by Tench_Coxe
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To: karpov
Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60.

Huh? I thought it was 2 cents?

14 posted on 11/15/2019 5:42:56 AM PST by Religion and Politics (It is time for more than one denomination of "Political Correctness".)
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To: karpov

A lot of money would be moved overseas.


15 posted on 11/15/2019 5:45:21 AM PST by Salvavida
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To: Tanniker Smith
If such a stupid plan was ever implemented, I could see a cottage industry of lawyers and accountants spring up whose sole purpose is to legitimately under-value assets across the board. You’d also have wealthy people selling their assets to each other once every year at steep discounts — to reinforce the low appraised values for “wealth tax” purposes.

“Hey, Bill Gates! It’s Warren Buffett. I have an office building I purchased a few years ago for $10 million. How’d you like to buy it for $250,000? And while I have you on the phone, let’s discuss my interest in buying YOUR office building!”

16 posted on 11/15/2019 5:46:09 AM PST by Alberta's Child ("In the time of chimpanzees I was a monkey.")
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To: karpov

The Romans, in the 2nd and 3d century AD, when faced with confiscatory taxes solved the problem by getting a new emperor. The process was usually quick and efficient but hard on members of the outgoing regime.


17 posted on 11/15/2019 5:47:29 AM PST by Lion Den Dan
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To: karpov

If this comes to pass, there will be a tsunami of capital flowing out of the US. Some enterprising nations will declare amnesty for rich people and have to power to make Fauxcahantas think twice about flexing her muscle. Too bad Russia has lousy weather.


18 posted on 11/15/2019 5:48:08 AM PST by beef (Caution: Potential Sarcasm - Process Accordingly)
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To: karpov

Sounds like sharia law to me!


19 posted on 11/15/2019 5:48:18 AM PST by rawcatslyentist ("All that is necessary for evil to triumph is for good men to do nothing")
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To: karpov

Watch $2.5T disappear from the common investment markets overnight.

There is much of enduring value to own which cannot be easily assessed & taxed.
The rich are rich because they know how to acquire & retain wealth, regardless of assaults thereon.


20 posted on 11/15/2019 5:51:22 AM PST by ctdonath2 (Specialization is for insects.)
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