The first thing that needs to be noted about Elizabeth Warren’s wealth tax — and, unsurprisingly, is seldom mentioned in discussions of it — is that it would redistribute hundreds of millions of dollars from the rich to the nearly rich.
Let’s assume for argument’s sake that the wealth tax passes as she now proposes it and raises $2.75 trillion, as she estimates it will. (These are big assumptions, but bear with me.) Her plan would dedicate $1.25 trillion of that sum to “higher education” — that is, mostly to 18-year-olds who are already in the top third of their peers, as academic achievement and economic status are so closely correlated. Just over half of that ($640 billion) is dedicated to debt relief for college students. She would cap the relief at $50,000 and aim it at those who are earning less than $100,000 a year.
The caps and controls would exclude those doctors and lawyers who come out of school with a huge portion of the total student debt in America, but begin earning well into the six figures shortly after graduation. It’s also true, though, that many student-debt holders who have a similar career trajectory can afford to earn less than $100,000 a year in order to win $50,000 in debt relief. Debt relief would rain down on graduates who are themselves privileged enough to take entry-level jobs in high-status fields for the promise of delayed rewards. Many of these debt-holders would still be on their high-earning parents’ health-care plans.
A great part of the Warren debt-relief plan is simply taxing the wealthiest 75,000 households, and redistributing the gains to the next-wealthiest 250,000 households. We need to call this what it is: The continuing transformation of the Democratic party into the party of upper-middle-class entitlements, an attempt to take from the “bad” rich — the asset holders — and give to the “good” nearly rich. That many of the latter will become or are children of the former is just a trifling detail.
While it could hardly be called revolutionary, the plan is actually pretty smart politics for Warren and the Democrats. It will dedicate a new program to demographic groups that have been moving away from Republicans and consolidating behind Democrats in recent elections: college graduates, upwardly mobile suburbanites. It will also address the genuine scandal of ever-growing student debt, without addressing the problem of ever-growing tuition and the luxurification of the American college experience. That is, it will relieve the costs to students, without really hitting the bottom line for the professoriate and administrations of colleges — another constituency that punches above its weight in the Democratic coalition.
All of this should invite Republicans and conservatives to think harder about what direction they want to go in the future. There has been a lot of lazy and unfocused rhetoric about social and cultural “elites” in our circles, but not much in the way of making a coherent political case about the corruption and unfairness that is creeping into our system of meritocracy. Elizabeth Warren gets credit for having a “plan for that.” We may not like her plans. But until we figure out how to make the college experience a better value, more worthwhile and less costly to students and the rest of society, the question will gnaw: Do we have anything better?