The founder and manager of the world’s biggest hedge fund said Wednesday that if Democratic Socialist Rep. Alexandria Ocasio-Cortez’s high-tax proposals every become a reality, investment capital will dry up in the United States as investors find friendlier economic environments elsewhere.

“How tax rates are changed will have a huge effect on incentives and could have a huge effect on capital flows, and that will have big effects on markets and economies,” Ray Dalio, who runs $160 billion at Bridgewater Associates, told CNBC in an exclusive interview at the World Economic Forum in Davos. “It’s going to be a bigger market-influencing issue than people now realize.”

Dalio said he thinks that political reaction to the widening gap between the haves and have-nots likely will influence who wins the 2020 election — that is, Democratic candidates will exploit that gap, most likely, in their bid to unseat billionaire POTUS Donald Trump.

That said, Dalio noted that there are big problems with Ocasio-Cortez’s stated objective of raising income taxes to 70 percent on earnings above $10 million.

“This polarity issue — the income and opportunity gap — will determine who is elected and what approaches are going to be used to deal with that issue,” Dalio told the network.

“We have entered the presidential election cycle in which different policies and their probabilities of getting enacted to deal with this income-opportunity gap issue will be really important; probably the most important issue of our time,” he added.

During a recent interview with CBS News’ “60 Minutes,” Ocasio-Cortez laid out her tax plan — about a year to the day after a GOP-majority Congress passed, and POTUS Trump signed, a tax reform plan that reduced income taxes on more than 85 percent of Americans while substantially reducing them for American corporations.

“We’re in agreement on the problem that’s behind that suggestion,” Dalio said of Ocasio-Cortez’s proposal. “We have to make capitalism work for the majority of Americans. I don’t know that we’re in agreement on the mechanics.”

Specifically, Dalio has concerns about the unintended consequences of raising marginal income tax rates on wealthy Americans and how the additional revenue would be used, which he says might have a negative impact on U.S. productivity.

“If we’re to have a 70 percent marginal tax rate, most individuals affected by it will calculate whether they should instead operate as a corporation in order try to convert ordinary income to capital gains, so I wonder how that will be handled,” Dalio said. “And I wonder what will be done to influence whether capital will leave the country.”

Former Former Federal Reserve Chairman Alan Greenspan said Ocasio-Cortez’s high tax plan would be a “terrible mistake” that would devastate the economy, which has been on a tear following last year’s tax cuts and POTUS Trump’s cutting of regulations.

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