(Bloomberg) -- Former Treasury Secretary Lawrence Summers lambasted proposals to tax the wealth of the richest Americans made by presidential candidates Elizabeth Warren and Bernie Sanders.
Not only would the Supreme Court likely rule such levies unconstitutional, but they would raise far less money than advertised and do nothing to erode what political influence the wealthy have if implemented, he said.
“For that to be the defining element in the progressive agenda in the United States, it seems to me to potentially sacrifice an immense opportunity,” he told an event Thursday at the Peterson Institute for International Economics in Washington.
Summers served in the administrations of Democrats Bill Clinton and Barack Obama, so his criticism of the wealth tax proposals of two of the party’s presidential hopefuls carries particular weight.
Vermont Senator Sanders has proposed starting taxing wealth of $32 million at 1%, increasing to an 8% tax on fortunes above $10 billion. Massachusetts Senator Warren would place a 2% levy on fortunes above $50 million and a 3% levy on assets of more than $1 billion.
Summers argued that there were more effective ways to make the tax code more progressive, including increasing estate taxes and closing such tax breaks as carried interest.
“It would be reasonable to tax inheritances as income as a way of getting at large fortunes,” he said.
In a separate presentation at the Peterson Institute, University of California, Berkeley, professor Emmanuel Saez defended the wealth tax as a way to tackle rising inequality in the U.S.
The Warren proposal would have raised about a half trillion dollars from the 15 richest Americans if it had been place since 1982, according to calculations by Saez and fellow University of California professor Gabriel Zucman. The two men worked with both Warren and Sanders on their tax plans.
Appearing with Saez on a panel after their presentations, Summers repeatedly challenged the University of California professor about his proposal.
“Maybe we got our numbers wrong,” Saez said at one point in response to Summers’ repeated criticisms. “Read our book, look at the numbers and make your own judgment.”
Saez and Zucman released a book this week, “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay,” making the case for large tax increases on top earners.
Big tax boosts on the rich have been a key topic in the 2020 Democratic primary as candidates have looked for proposals that would lessen inequality and raise revenue to pay for expensive social programs, such as expanded health care and free college tuition.
To contact the reporter on this story: Rich Miller in Washington at email@example.com
To contact the editors responsible for this story: Margaret Collins at firstname.lastname@example.org, Robert Jameson, Malcolm Scott
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.