The Corner

Elections

Warren’s Wealth Tax Is Unethical

Sen. Elizabeth Warren speaks at the Presidential Gun Sense Forum in Des Moines, Iowa, August 10, 2019.

Senator Warren would impose a 2 percent annual tax on wealth above $50 million, and a 6 percent annual tax on wealth above $1 billion.

These numbers may seem small, but remember that they would be applied every year. With wealth taxes, small numbers have large effects. Applied to an asset yielding a steady return of 1.8 percent (roughly what you’d get from a 10-year Treasury note), a 6 percent wealth tax is the equivalent of a 333 percent income tax.

If Senator Warren’s wealth tax had been in effect since 1982, Warren Buffett’s 2018 net worth would have been $14.5 billion, rather than the $88.3 billion it actually was. Jeff Bezos would have had about one-third of his current wealth. Bill Gates’s wealth would have been 81 percent less.

Sound public policy requires balancing competing goods. Senator Warren’s proposed wealth tax would fail to achieve appropriate balance in several important ways. It would not balance the moral obligation of the rich to pay more with the need to avoid reducing the rich to piggybanks for the rest of society. Its purpose of “safeguarding democracy” against the threat of plutocracy is both wildly overblown and inappropriate. Its extreme effects are not even remotely connected to the scale of the problem she seeks to address.

And as I discuss in my latest Bloomberg column, it throws a fundamental balance in the U.S. system of government out of whack — that between the rights of the majority to govern and the rights of minority groups to protection from majoritarian excess.

As the public debate has made perfectly clear, the wealth tax would be levied to knock the rich down a peg. Because the aesthetics of a society in which a few have fabulous wealth are unappealing to some. Because many believe no one needs that much money, and want to use the tax code to take it.

This would be an abuse of the tax system. It would be an abuse of government power. The tax code shouldn’t be weaponized for the purpose of penalizing any minority. Not even the rich.

Check out my column for my full argument. Your comments, as always, are very welcome.

Michael R. Strain — Michael R. Strain is the director of economic-policy studies and the Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute.  

Most Popular

Elections

The Burning Times

Welcome to The Tuesday, a weekly newsletter about politics, language, culture, pedantry, partisan pyromania, and suchlike. The Right loves a factional brawl, and the past week brought a pentagonic crossfire between Peggy Noonan, Mona Charen, Charlie Sykes, Ramesh Ponnuru, and David French, five right-leaning ... Read More
Elections

The Burning Times

Welcome to The Tuesday, a weekly newsletter about politics, language, culture, pedantry, partisan pyromania, and suchlike. The Right loves a factional brawl, and the past week brought a pentagonic crossfire between Peggy Noonan, Mona Charen, Charlie Sykes, Ramesh Ponnuru, and David French, five right-leaning ... Read More

What or Who Decides This Election?

We know where to watch in the next few weeks but have no real idea what we will be watching. Yet pundits, the media, and the Left seem giddy that their polls show a Trump slump, as if they have learned nothing and forgotten nothing from 2016. But in truth, the news cycle over the next three months may well favor ... Read More

What or Who Decides This Election?

We know where to watch in the next few weeks but have no real idea what we will be watching. Yet pundits, the media, and the Left seem giddy that their polls show a Trump slump, as if they have learned nothing and forgotten nothing from 2016. But in truth, the news cycle over the next three months may well favor ... Read More

The Policing Crisis in New York City

On Tuesday afternoon in Manhattan, cops carried out a routine arrest of an 18-year-old New York activist who is suspected of disabling police cameras by spraying paint on them. The person is suspected of this for very good reason: There are videos starring the perpetrator carrying out the act in question. ... Read More

The Policing Crisis in New York City

On Tuesday afternoon in Manhattan, cops carried out a routine arrest of an 18-year-old New York activist who is suspected of disabling police cameras by spraying paint on them. The person is suspected of this for very good reason: There are videos starring the perpetrator carrying out the act in question. ... Read More
Media

A Brutal Assessment of Cable News

On the menu today: An MSNBC producer resigns, and metaphorically nails 95 theses to the doors of cable news, spotlighting how the industry has failed in its duties to inform the public; the president has another pyrotechnic explosion of a television interview; unnamed White House staffers whisper that the ... Read More
Media

A Brutal Assessment of Cable News

On the menu today: An MSNBC producer resigns, and metaphorically nails 95 theses to the doors of cable news, spotlighting how the industry has failed in its duties to inform the public; the president has another pyrotechnic explosion of a television interview; unnamed White House staffers whisper that the ... Read More