During an interview on “The View” on Thursday, Democratic 2020 presidential candidate Elizabeth Warren embodied a lefty Santa Claus as she discussed all the “universally free” things her new tax plan supposedly guarantees.
As the audience went wild off-camera, enthused Warren explained that her new plan could make college debt poof away with her proposed wealth tax.
“Two-cent wealth tax on the top one-tenth of 1 percent, your 50-millionth and first dollar, and with that we can cancel student loan debt for about 95 percent of the people who have it,” Warren said. Her fans cheering, Warren added, “Oh, but we can do so much more…”
You can almost see the festive sleigh hovering behind Warren as she rattles off all the goodies her wealth tax can magically provide:
1) Universal tuition-free technical school, two-year college, and four-year college;
2) Taxpayer-sponsored child care for every child aged 0-5;
3) Universal pre-K for every 3- and 4-year-old; and
4) Higher wages for every child care worker and preschool teacher,
All this how? Warren held up two fingers. “Two cents,” she said.
“The View” co-host Joy Behar asked how Warren would counteract Republicans’ assault against her by using the “‘S’ word” (socialism). Warren replied by saying that her wealth tax aligns with American values.
“They can’t pitch in 2 cents on the 50-millionth and first dollar?” Warren said. “If they could just pitch in the 2 cents, then everyone in this country has a chance to build something.”
Warren is not wrong by saying that equal opportunity is an American value. Warren’s “two cent” fix even sounds like common sense, and may have appeal to parents and students who don’t know how math or taxes work.
However, if Warren’s proposal sounds too good to be true, that’s because it is. According to a CNN article, economists who helped formulate Warren’s plan, Emmanuel Saez and Gabriel Zucman, calculated the wealth tax would add $2.75 trillion to government coffers in about ten years. Also in a decade, Warren’s universal college plan would cost $1.25 trillion, and her universal child care would cost $700 billion.
However, compared to an IRS report, Saez and Zucman’s numbers are grossly inaccurate. Harvard professor Lawrence H. Summers and Wharton School professor Natasha Sarin estimate that Warren’s wealth tax would only bring in about “40 percent of what Saez and Zucman estimate,” Summers and Sarin said. Hmm, guess it can’t be just taking two cents from billionaires after all.
Not only are the numbers for Warren’s universal plans unpredictable, there is also doubt whether a wealth tax could be enforced. According to an article by Chicago Booth Review, wealth is difficult to value, and therefore difficult to tax.
Larry Samuelson at Yale’s Department of Economics told CBR, “Wealth is notoriously difficult to tax. Enforcement problems are compounded by the distortions induced by legal tax evasion.” Robert Shimer, at University of Chicago’s Department of Economics, agreed, saying that a wealth tax would cause such evasions as “the wealth moving offshore, despite provisions against that.”
Warren’s plan presents another issue. It is unconstitutional to tax based on wealth (assets versus income). The 16th Amendment states that “Congress shall have power to lay and collect taxes on incomes” (emphasis added). CNN reports that this issue will most likely be taken the Supreme Court should the tax be implemented.
The numerous issues with Warren’s plan make her “two cents” sound fantastical. Warren’s sleigh is piled high with improbable proposals, and Americans deserve to hear the hard truth that Santa Claus doesn’t exist.