Democrat 2020 presidential candidate Sen. Elizabeth Warren (D-MA) has proposed a two percent wealth tax for Americans who have $50 million or more and an additional one percent tax on billionaires — an idea that has failed in other western countries that have penalized successful citizens.
National Public Radio (NPR), which is, in part, supported by American taxpayers, interviewed Gabriel Zucman, an associate professor of economics at U.C. Berkeley, on Morning Edition.
“A wealth tax is like a property tax,” an NPR reporter introducing the story said. “But instead of just real estate, it covers all forms of wealth — cash, stocks, diamonds, horses, super yachts, basically, everything.”
“The main justification for the wealth tax is that it’s the most powerful tool to limit the rise in wealth inequality,” said Zucman, who helped Warren design her wealth tax proposal.
“So Senator Warren was interested in proposing a wealth tax, and she knew about our work on wealth inequality in the U.S.,” Zucman said.
“Zucman’s research showed that the top 1 percent has been gobbling up a greater and greater share of national wealth, which is why he supports a wealth tax,” the NPR reporter said, adding that although such a tax would be new in the United States, it’s been tried with little success in Europe.
That’s according to Sarah Perret, a tax economist with the Organization of Economic Cooperation and Development, whom NPR interviewed for its story.
“She says wealth taxes didn’t work that well in Europe,” the reporter said.
“And so the trend has really been to repeal them,” Perret said.
In 1990, there were 12 countries in Europe that had a wealth tax. Today there are only three. Perret says they didn’t work for a lot of reasons. Among other things, it costs a lot to enforce. It pushed rich people out of the country, and the wealth taxes didn’t raise a lot of revenue.
“That was mainly because many assets were exempt, and wealth taxes were easy to avoid,” Perret said. “I would say, in general, it hasn’t been great.”
Warren, however, defended her wealth tax idea in an email to NPR.
“She told us in an email, quote, ‘I specifically designed this proposal to account for lessons learned from wealth taxes in other countries,’ unquote.”
“Unlike in the European Union, it’s hard for Americans to freely move to another country or state and escape national taxes,” the reporter said.
And if they could escape, Warren and Zucman’s wealth tax would “confiscate 40 percent of a person’s wealth over $50 million if they renounce their citizenship.”
But there is yet another difference, according to Zucman, because Warren’s tax only targets very wealthy people.
And Warren’s tax does not allow for any exemptions, Zucman said.
CNN reported that Warren is also proposing another redistribution of wealth childcare program as part of her platform.
“According to Warren’s campaign, her childcare proposal would create a federal program that establishes a network of public and family-run centers,” CNN reported. “The care would be free for families with incomes below 200 percent of the poverty level — about $51,500 for a family of four.”
“Notably, Warren’s child care plan would be paid by a part of the revenue from her proposed wealth tax,” CNN reported.
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