Would Elizabeth Warren’s Wealth Tax Work?

Yuval Rosenberg
Polls show that some of the Democratic Party’s most progressive policy proposals – including Medicare for All, free college tuition and a new tax on wealthy households – are broadly popular with American voters. But according to a report from Jim Tankersley and Ben Casselman of The New York Times, many Democratic voters are worried that these proposals could turn into political liabilities in the 2020 election.The fear, voters told Tankersley and Casselman, is that in the current polarized political environment, opponents of those policies will succeed in portraying them as too far to the left, alienating moderate voters and boosting the chances of re-election for President Trump.“In terms of progressive policy, one of the big things we’re finding is it’s not opposition we’re fighting, it’s cynicism. People don’t think it can happen,” Democratic pollster Celinda Lake said.The numbers: Support for the policies is pretty clear. In a new poll, the Times found that 66% of voters supported a 2% tax on households with a net worth over $50 million, a proposal that has been floated by Democratic presidential candidate Sen. Elizabeth Warren (D-MA). Even a majority of Republicans expressed their support for this idea.Medicare for All and free college tuition also received majority support – 58% and 59% respectively – though neither proposal is backed by a majority of Republicans.The reasons why: Some poll respondents said it was becoming increasingly obvious to voters that at a time of rising economic inequality, the country’s wealthiest citizens need to pay higher taxes. More cynically, Republican strategists said Americans approve of tax-the-rich proposals because they see it is as something of a free lunch, gaining benefits paid for by someone else.What’s next: Democratic voters seem torn about their priorities. Many are attracted to progressive proposals, but that hasn’t given liberal stalwarts like Warren an advantage over frontrunner Joe Biden. The reason, Tankersley and Casselman say, is that so many Democrats are worried about successful attacks from the right, which could cost them the White House next year.“I would like someone more radical, but because the situation is so dire, I think Joe [Biden] is our safest bet to beat Trump,” one Florida Democrat said. “I used to think that policy was more important, but because of the stinging defeat that we had, I don’t trust that anymore.”Like what you're reading? Sign up for our free newsletter.

Sen. Elizabeth Warren (D-MA) has laid out an ambitious slate of proposals as a candidate for the 2020 Democratic presidential nomination: universal childcare and pre-K, free college tuition and student debt relief, building affordable housing, combating the opioid crisis and more. Her plans would involve some $3 trillion in spending over 10 years, according to estimates by her campaign cited by The Washington Post — and they would all be paid for by higher taxes on the wealthy and corporations.

But, the Post’s Toluse Olorunnipa reports, “Warren’s ambitious agenda relies on two assumptions that defy a long history of U.S. policymaking: First, that the country’s wealthiest taxpayers won’t find ways to evade the targeted tax hike she proposes; and second, that new entitlement programs won’t result in ballooning costs that plunge the federal government deeper into debt.”

Olorunnipa notes that a recent poll of about 40 economists by the University of Chicago Booth School of Business found that 73% agreed or strongly agreed that Warren’s proposed wealth tax “would be much more difficult to enforce than existing federal taxes because of difficulties of valuation and the ways by which the wealthy can under-report their true wealth.”

One of the economists behind Warren’s wealth tax plan, Gabriel Zucman of the University of California at Berkeley, told the Post that Warren’s plan is designed to limit tax evasion and that the estimate that it could raise $2.75 trillion over 10 years factors in 15% tax avoidance. “If it’s properly enforced, and there’s a serious effort at having no exemptions and enforcing it strongly, then it can collect a lot of tax revenue,” he said.

Read the full piece at The Washington Post.

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