Sen. Elizabeth Warren (D-Mass.) introduced legislation that would create a wealth tax on Americans worth $50 million or more. AP Photo/Jose Luis Magana What irony: The Democrats in Congress who repudiated President Donald Trump’s “Build the Wall” plan to secure our border now want to construct a financial Berlin Wall to prevent Americans from leaving.
Sen. Elizabeth Warren (D-Mass.) last week introduced legislation to establish America’s first-ever wealth tax: a 2% per year levy on the wealth — not the earnings, but the holdings — of those with assets worth $50 million or more, plus an extra 1% imposed on billionaires.
She calls it the “Ultra-Millionaire Tax,” saying that for every dollar held by a rich person, “they pay just two cents.”
That may not seem too confiscatory, but remember, it’s an annual tax — so over a decade it could snatch away one-third of the savings built over a lifetime.
Over 25 years it could grab two-thirds of a billionaire’s wealth.
Warren estimates her sock-it-to-the-rich plan would raise $6.2 trillion over the next decade — a preposterous exaggeration.
And she wouldn’t use the money to lower the national debt, now nearing $40 trillion.
The senator would spend the cash for a smorgasbord of new federal welfare programs: more public housing, expanded Medicare and Medicaid subsidies, free community college and “universal” child care.
She’s already corralled 50 Democrats in Congress to support this explosion of greed and envy, even though it’s almost certainly unconstitutional.
That’s not enough to force the measure through in the current Congress — but it certainly points to where the tax-and-spenders plan to take us if they triumph in November’s midterms.
To top it all off, Warren’s bill would impose a 40% “exit tax” on the assets of millionaires who leave the country to try to escape the confiscation.
At least some liberals are finally acknowledging that high tax rates change behavior.
A few prominent Democrats, like New York Gov. Kathy Hochul and California Gov. Gavin Newsom, have lately questioned the wisdom of soaking the rich — at the state level, anyway.
They’ve seen the results: The rich hightail it out of town and take their businesses with them.
High-tax states have lost more than $1 trillion in income due to more than 5 million Americans moving to low-tax red states over the past decade.
So it’s no wonder the left now wants a national wealth tax, casting a wider net to capture all the nation’s job creators and wealth producers.
Their logic: If high taxes don’t work in California, New York or New Jersey, then raise the rates nationwide — and turn the whole country into a giant tax-hell blue state.
Why? Because if a nation taxes people punitively for making money and then snatches away their wealth when they try to leave, those people don’t create wealth in that country in the first place.
The billionaires will escape to Switzerland or the Cayman Islands and build their businesses there.
It’s an inescapable law of economics: Capital always flows to where it’s treated best, just as assuredly as water always flows downhill.
That’s why nearly every nation that has tried a wealth tax, from socialist Sweden to oligarch-run Russia, has repealed it.
When France implemented a wealth tax of 1.5% in 1982, an estimated 60,000 well-off French citizens left the country.
According to OECD data, wealth taxes never raise the funds anticipated.
Voters in Denmark get it: Just last week they decisively rejected the ruling Social Democratic Party, which had made a proposed wealth tax the central plank in its platform.
Unlike Elizabeth Warren, Americans don’t hate the rich and successful.
We don’t despise people like Warren Buffett, Jeff Bezos, Michael Jordan and Michael Dell.
We admire them, try to emulate them and want to get rich like them.
Studies have shown that more than 90% of the benefits from an invention, a new blockbuster drug or a successful business like Amazon don’t go to the “greedy” founder or inventor, but to those who use their products and those the business employs.
The more billionaires, in other words, the richer we all grow.
Warren’s plan would also be a monstrous misallocation of resources, taking billions from America’s greatest job creators and giving the money to sham Somali child-care centers.
Elon Musk has said it best: “I can invest $1 billion a lot better than the politicians can.”
America has more millionaires and billionaires than any other nation because we don’t punish success.
We allow the free market to work, and we cheer the wealth that risk-taking creates.
That’s known as the path to the American Dream — a path Elizabeth Warren wants to block with her wealth-tax Berlin Wall.
Stephen Moore is a co-founder of Unleash Prosperity and a former senior economic adviser to Donald Trump.
