Warren’s ‘2 Cents’ Come at Your Expense: Her levy on wealth would sink stocks

Sen. Elizabeth Warren is campaigning for a 2% surtax on anyone’s net worth over $50 million and 6% on more than $1 billion. Most discussion of the wealth tax has focused on whether it could generate sufficient revenue to fund Ms. Warren’s various spending plans, and the revenue likely would be far less than she projects. But that focus overlooks the ways the massive new tax would harm all Americans.

If you take comfort in Ms. Warren’s claim that her tax would apply only to the wealthiest Americans, think again. In 1913 the progressives of that era sold a federal income tax with the same pitch, saying it would be drawn only from the very wealthy. In the first year a mere 2% of households filed tax returns. Five years later 20% had to file returns, and by the 10th year nearly 40% did.

“Gullible” is inadequate to describe anyone who believes Ms. Warren and other progressives would resist the temptation to apply a wealth tax to a much broader swath of savers. Given the scope of her proposed government expansion, the tens of trillions in new spending would demand it.

All this assumes that the government would be able to assess the wealth tax to begin with, but experience gives reason for doubt. Twelve European countries had a wealth tax in 1990, but only three maintain one today, largely because implementation problems and negative effects proved insurmountable.

The first problem with assessing the tax is that most wealthy people have illiquid assets, not piles of cash lying around. Ms. Warren plans to solve that problem by letting taxpayers tender a portion of their illiquid assets to the government, rather than forcing them to sell and pay cash.

The whole scheme would be a failure.

In her plan if you don’t have the cash on hand the Government will take assets from you for the tax. Then the government has to sell those assets to get the cash. Now the government has no business sense at all so they will essentially dump all these assets on the market and it will end up a fire sale.

They will get only what will be paid and then who will be buying, certainly not individuals they have no money. Will corporations be buying? All assests will end up being depressed.

Then here’s another thing not being talked about. You signed over the assets that were valued by your CPA’s and the government accepted them at that value. But when the government sold them they didn’t get the full value. So will the government come back at you and force you to sell or turn over more assets to make up the loss? Would you be surprised if they did that.

Then every year after the first the take gets smaller and smaller as the value of all assets plummet. Then What Ms. Warren?????????????/

It is preposterous. The market for property from antiques to art to land and luxury homes will plummet as people are forced to liquidate these assets to pay the taxes. But who will buy them? Nobody will buy them thinking they will appreciate in value because they will depreciate by 2% per year from the tax alone. The value of something is determined by the market price but the markets for these items will collapse. Now imagine the ways to evade the tax, for example 2 people each with a Van Gogh painting worth $100 million. They each sell their painting to the other for $1 million. Now they are worth 1/100th of the “value”.

What about the great art collections? Are Museums and Universities subject to the tax? Who gets an exemption? How about you simply divide the collection into different entities?

As for the stock transaction tax - this will lead to volatile pricing and less liquidity. But worse, it strips the value of everybody’s retirement and savings. Every time you pay the transaction tax that is money taken right off the top of your retirement savings that will never compound over time. The benefit of saving over decades is that the gains compound over time. Calculate how much loss average people will bear over their working careers just from the loss of compounded interest. Will she exempt retirement accounts? Public retirement funds? What’s left to tax if she hands out exemptions? Those holding assets over $1 Billion will divide it up into different entities or leave the country to avoid the 6% tax. Assets over $50 million will do the same, or find a way to reassess.

And of course, taxing billions 6% a year will ultimately result in nobody having any billions - they will be stripped down over time and unlikely to achieve outsized gains to earn more than the tax. $1 billion this year becomes $940 million next year - no longer subject to the 6% tax and leaving a massive hole in her budget. Eventually all billion dollar assets will fall below the threshold forcing her to deficit spend or raise the tax on smaller amounts.

Every way you look at it her proposal is preposterous. And all this nonsense to solve a “problem” that effects something like 8% of the citizenry. Why take the healthcare people like away from 92% of the people to solve the problem of the 8%? As for being ‘busted’ by health care costs, this can be addressed by simpler means such as a law that prevents healthcare creditors from breaking people and perhaps creating a fund similar to FDIC that would help reimburse providers who are hit with a large number of defaulted payments.

I couldn’t believe that is how it will work. The government cannot tell you what the value of some piece of art is. The market determines it. The market price for all high priced assets will plummet immediately as everyone will be liquidating to pay the taxes flooding the market with supply, and nobody will want to own them except for their aesthetic value - certainly not because they think they will appreciate in value nobody will want them to appreciate!

If you did own for example a collection of art or other property and had to fork over say $60 million to pay the tax but instead you gave the government a painting which they then sold for $20 million, you would argue the opposite - that the government over-valued your collection and that you should get a refund.

Not to mention the many other schemes. There are plenty of loopholes. Send the art overseas where it is not taxed. Place them into bonded warehouses or escrow accounts indefinitely, where the ownership can be disputed. Bury them, and replace the ones on display with known forgeries. Divide your assets up among different entities or among your family. You and the spouse are worth $2 billion? Give $1 million to charity and get a divorce, now you are each only worth $999.5 million and just saved almost $100 million in taxes in the first year alone. Her proposal is one of the most economically ignorant and destructive ideas imaginable.

As a side note about misguided, post-17th Amendment ratification Sen. Warren and taxes, please consider the following.

Not only do patriots need to support PDJT in putting a stop to unconstitutional federal taxes, taxes that Congress cannot justify under its constitutional Article I, Section 8-limited powers, but “April 15” tax day needs to be changed to the day before election day.

"The “Holy Grail” of organized crime is to control government power to tax." —me
"The 16th Amendment effectively repealed the involuntary servitude aspect of the 13th Amendment imo, evidenced by unconstitutional federal taxes." —me
- "Congress is not empowered to tax for those purposes which are within the exclusive province of the States." —Justice John Marshall, Gibbons v. Ogden, 1824.
- "13th Amendment, Section 1:
  Neither slavery nor involuntary servitude [emphasis added], except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction."
- "16th Amendment:
  The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
"The constitutionally undefined political parties are basically rival, corrupt voter unions, “union dues” paid by means of unconstitutional federal taxes.” —me
"Patriots need to support PDJT in demanding that Congress moves "April 15" tax day to the day before election day." —me
"The smart crooks long ago figured out that getting themselves elected to federal office to make unconstitutional tax laws to fill their pockets is a much easier way to make a living than robbing banks." —me
"Federal career lawmakers probably laugh all the way to the bank to deposit bribes for putting loopholes for the rich and corporations in tax appropriations laws, Congress actually not having the express constitutional authority to make most appropriations laws where domestic policy is concerned. Such laws are based on stolen state powers and uniquely associated stolen state revenues." —me

Any tax on billionaires is a tax on working families.

Billionaires own companies

Billionaires decide the prices of the goods we buy.
Billionaires decide the amount of the wages we receive.

Any added “rich tax” expense gets passed on through higher prices and/or lower (or foregone increases to) wages.

To the rich, tax expenses are budget items that cause adjustments to other variables in order to achieve a market rate of return on their business investments. So basically, working people and consumers pay the tax, even if they don’t know it. When I fill up my gas tank at Exxon, the price I pay per gallon reflects the corporate income tax, or any other tax expenses Exxon will have to pay on their profits OR on the owner’s accumulated wealth - if Warren’s crazy wealth tax is ever implemented.

And if any other laws make it impossible for billionaires to pass along tax expenses, then rather than see their assets depleted or their business investments not earning more than a risk-free rate of return, that is when businesses close or relocate to friendlier business climate in other countries.

That’s the reality of free market capitalism, the best economic system there is to create more prosperity and financial security for everyone.

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