Elizabeth Warren has all sorts of grand ideas of what she can do for Americans if she’s elected President. The problem is that, although she “has a plan for that,” Americans may not want to pay the price.
The Democratic candidate and Massachusetts Senator has been relatively quiet at what it will cost taxpayers to come up with the ideas that she has, including Medicare for all. Recent analysts have run the numbers – and it could mean a 100% tax rate for some.
A variety of investors could experience tax rates that exceed 100% if Senator Elizabeth Warren becomes president. Her tax plan was analyzed by the Wall Street Journal, and even Democrats say that it’s extreme.
The rates that would see the most significant hike are the top tier investors. This is as a result of the various taxes that the Democratic hopeful has talked about. Maybe even Warren doesn’t realize that a little bit here for Medicare for All and a little bit here for climate change and a little bit more over here for something else can add up to a considerable amount of money. However, she doesn’t want to talk about what it’s going to cost. She just wants to keep promising Americans what they want to hear.
Warren has already called for a top marginal rate to hit income taxes that will go up to 39.6 percent and a six percent annual tax on accumulated wealth. This would be in addition to the state taxes that are already in place.
The Wall Street Journal breaks it down to make it easier to look at. A billionaire with a $1000 investment may earn a 6% return, totaling $60. This capital gain would be subject to a significant number of taxes. In the end, his $60 investment profit could result in taxes as high as $95 for a total combined tax rate of 158%. Anyone who isn’t concerned about such things needs to be.
Elizabeth Warren argues that taxes are a necessity in order to pay for the various proposals. However, not everyone wants public housing, free college tuition, and Medicare for all – which means that not everyone wants to pay for these things.
More and more Democratic economists have been criticizing her tax proposals since it could have a dramatic and negative impact on economic growth.
Analysts from the University of Pennsylvania identified that her wealth tax alone could have a .2% reduction on the economic growth for the United States each year over the next 10 years.
Slower economic growth would result in the country’s inability to pay for critical spending priorities, including defense. Warren has already pledged to cut defense budgets by 12%, leaving the country vulnerable. It may also force investors to pull investments from the stock market, plunging the markets and hurting 401(k) retirement plans.
Edward Wolff, a wealth tax expert, and economist says that the plan could create a “big capital flight” out of the US. No one wants to sit around and watch their wealth earning nothing or even dropping into negative territory.
Although there are plenty of Democrats lining up to vote for Elizabeth Warren, others are getting worried. Democrats are starting to voice their concerns, including Larry Summers, an economist who has worked with both the Obama and Clinton administrations. He suggests looking carefully at European countries that are considered to be more progressive and how they have limited wealth taxes.
Even former Pres. Barack Obama warns that some of the progressive proposals could alienate voters. While he didn’t name names, the comments were obviously directed at such progressives as Bernie Sanders and Elizabeth Warren. He suggests that while visions can be bold, they need to be rooted in reality. Additionally, he said that the average American doesn’t believe in tearing down the system and rebuilding it.
Many of the people voting for Warren like the idea of voting progressive. They don’t like the current state of America and want to see changes. However, they have to read between the lines. There’s a difference between making changes and wiping out everything to build completely new. The United States is based on capitalism and a move to socialism could be catastrophic.
While the idea of free college tuition and Medicare for All sound great, it comes at a cost – a cost that the average American doesn’t want to pay. Although Warren may not be willing to discuss the cost, there are plenty of analysts who are – and the numbers are troublesome to say the very least