Posted on 03/13/2021 4:02:33 AM PST by Kaslin
Elizabeth Warren has again proposed a federal wealth tax.
The reality that the Supreme Court could declare a federal wealth tax to be unconstitutional is apparently irrelevant to Senator Warren. The possibility of a deep negative economic consequence to the United States as the result of a wealth tax is apparently irrelevant to Senator Warren. The probability that the stock market would be slaughtered by wealthy investors all simultaneously selling stocks and bonds is apparently irrelevant to Senator Warren. The probability that the only buyers of stocks and bonds after a wealth tax would be foreign governments is apparently irrelevant to Senator Warren.
For a wealth tax to be constitutional, two of the six conservative Supreme Court judges and all three of the liberal judges would be required to determine that a wealth tax is not a direct tax. These Supreme Court judges would need to conclude that more than a century of precedent need be obviated. These justices would need to conclude (a) that the 125 year old Pollak decision was incorrect, (b) Supreme Court Chief Justice Roberts was incorrect in what he wrote in NFIB v Sebelius in 2012 and (c) that most of the Supreme Court tax decisions over the past 100 years requiring what is referred to as a recognition event for income to be taxable are all moot. This is a tall order for a Court that reveres stare decisis, the legal principle of determining points in litigation according to precedent.
While there are progressive lawyers and progressive academics who insist that a wealth tax would be constitutional and that the Supreme Court would provide its stamp of approval, there are equally qualified lawyers and academics who believe that a wealth tax would not be constitutional.
Why Senator Warren is not pursuing a wealth tax as a constitutional amendment is a question she has not addressed. Likely, this is because she does not believe the country would support a constitutional amendment to impose a wealth tax. There should be a message in that line of reasoning.
If there is only a 20 percent chance that Senator Warren’s tax plan would be unconstitutional, implementation of a federal wealth tax and creation of programs that would be supported by the wealth tax would be a fool’s errand. (This author believes there is a near 100 percent chance that the current Supreme Court would find a national wealth tax to be unconstitutional.) Congress could not in good conscious implement any continuing new programs after passage of a wealth tax, lest the funds no longer be available in year three or four after a negative decision by the Supreme Court.
If the Supreme Court ruled against Senator Warren’s wealth tax, the Treasury would be forced to return every wealth tax dollar previously collected (with interest) along with eliminating every new program funded with the wealth tax unless other taxes were raised significantly.
Senator Warren’s wealth tax provides for a 2 percent tax on net assets between $50 million and $1 billion and a 3% tax on net assets above $1 billion. Her projections show that $252 billion in federal taxes would be raised in year one. She is wrong by a factor of about 100 percent.
A wealth tax would be accompanied by the sale of assets by taxpayers in order to raise the capital to pay the wealth tax. Should the Senator’s wealth estimations hold true, along with her proposed increase in capital gains taxes, the combination of her new wealth tax accompanied by her new capital gains tax be a tax of 4% to $1 billion and 6 percent for and remaining assets. This would put the total wealth and income taxes raised by Senator Warren’s wealth tax to $500 billion per year.
Nothing Elizabeth Warren can pass in Congress will change the underlying basics of supply and demand. The estimates being made with respect to the funds that would be raised from a wealth tax are wildly optimistic. There would appear to be an assumption that the sale of $500 billion of assets every year to pay the wealth tax along with the necessary income taxes would not be accompanied by a reduction in the price of the assets to be sold.
It is axiomatic that the value of investment assets would decline dramatically if an annual wealth tax was imposed on the wealthy. New investment would decline if not cease. When everyone is a seller, prices go down. Faced with a ten-year $5 trillion tax bill over ten years, the wealthy would not be buying stocks and the value of pension plans would collapse along with the revenues collected.
As pointed out by the Tax Foundation, the only possible buyers would be foreign governments who would be purchasing at bargain basement prices. Who would think that selling America to foreign nations is a great way to move forward toward the middle of this century?
The more famous quote is that a rising tide raises all ships. Senator Warren’s wealth tax would create the reverse which is equally true: A falling tide lowers all ships.
Flailing Flabby Arms Lizzy Warpath at it again?
Masses of ordinary folks hold stocks because of their IRAs. It’s no longer just for the rich.
The rich do much better at stimulating the economy than the government. The rich don’t waste it.
But I'm sure that's just a coinkydink.
To be liberal, one has to be totally ignorant of human nature, or at least intentionally ignorant of it. There is a reason Socialism has always failed. When extra effort doesn’t result in extra reward, humans stop putting in extra effort. It’s as simple as that.
The same is true of taxes. Whenever something is taxed, the tax reduces its value. Taxing wealth reduces wealth. Wealth is one of the few things created by man, not God. Wealth is created only when the cost of producing something is less than the value created. Governments can only consume wealth, they never create it. Taxing it only increases the rate of consumption.
They aren’t ignorant. They are among the wealthy elite themselves and know that their losses wouldn’t hurt them like the poor widow giving up the two mites she could afford.
Yes senator warren.
If you would quit overspending you wouldn’t need to tax so much
And since there is no way of knowing if the wealthy have identified, claimed, and valued all of their wealth in order to complete the tax return properly, an army of auditors would be required to verify the results.
Actually, Lizzie and her buddies should come up with a "Reflection Tax." If you married into your own ethnic group, you should be subject to a liberal tax because your marriage and nuclear family does not reflect the ethnic makeup of TV commercials. That would make just about everybody in this country liable for that tax,
A tax on anything over $50 million? Pocahontas didnt thinnk this one through, Pelosi wont like it a bit, she’s worth at least $150 mil, hill and billary somewhere around 250 mil, doofus kerry arouond 190 mil last time I checked, so she’ll get some opposition from some heavy hitters.
Not very well thought out, she just wanted to make sure her own $15 mil or so wouldn’t be considered “wealthy”...so what if she lives in a $4 million mansion...rubs elbows with the same wealthy individuals on a daily basis...I don’t think they’ll like it much.
I think Pocahontas is just doing this to get her name back in the spotlight, nobody’s even glanced in her direction for at least 6 months, she knows this tax has no future.
As noted earlier, no law such as this will be allowed to apply to any Guv’mt employee. Like insider trading, it is perfectly legal for any CongressCritter to do that with what they know about laws/regulations about to be passed. Ditto on other activities that the proles can’t do. Term limits won’t fix this sort of corruption.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.