By Jon Dougherty
(TNS) One of 2020 Democratic presidential contender Sen. Elizabeth Warren’s signature economic policies, should she manage to win the White House in November, is to punish Americans who have achieved what we used to call “the American Dream.”
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Warren’s plan to “fix income inequality” is to place hefty taxes on millionaires and billionaires — a “wealth tax,” as she calls it — so she can take that money and redistribute amongst the masses.
Then everyone will be the same, and won’t that be just be peachy?
Except that not only is this scheme completely un-American, it’s utter nonsense. But don’t take our word for it.
As the Washington Free Beacon reports Monday, the ‘father’ of the wealth tax, if you will, has recently come out against his own concept, noting that taking money — and that’s what a tax is, a taking of property from someone who has earned it — to use in a vote-pandering redistribution scheme won’t raise standards of living and won’t ‘close the income gap.’
Wealth taxes of the sort proposed by Sen. Elizabeth Warren (D., Mass.) will have little impact on economic inequality, one of the pioneers of wealth taxation wrote in a recent paper.
Edward Wolff, an economist at New York University whose 1995 book Top Heavy was one of the first to float the idea of a tax on wealth, argued in a recent paper that Warren’s wealth tax would have a “minuscule” effect on wealth inequality. Using data from the Survey of Consumer Finances, Wolff examined the effects of both Warren’s tax and a Swiss-style wealth tax, finding that both would have minimal impact on America’s Gini coefficient, a standard economic measure of inequality.
“How do the Swiss and Warren wealth tax affect overall wealth inequality? On the basis of the Gini coefficient, there would be virtually no impact from either tax,” Wolff wrote. “If one objective of a wealth tax is to substantially reduce wealth inequality, neither of these taxes will achieve that objective.”
This finding, in particular from Wolff, challenges the efficacy of a tax which campaigns like Warren’s and Sen. Bernie Sanders’s (I., Vt.) have framed as a way to close the yawning gap between rich and poor. Although Wolff remains sympathetic to wealth taxation, his findings further illustrate why many European countries have abandoned wealth taxes in favor of other schemes.
It’s all rather complicated — Wolff uses terms like “Gini coefficient” and other formulaic equations — but suffice to say:
According to Wolff’s estimate, Warren’s wealth tax—using the old tax rates of 2 percent on wealth in excess of $50 million and 3 percent on wealth in excess of $1 billion—would cut U.S. Gini by at most 0.0005. In other words, wealth inequality would be reduced by roughly half a percent under the Warren tax scheme.
Meanwhile, the government will have confiscated some $300 billion in wealth earned by Americans who have risked much along the way to build their corporate and business empires. How is that fair?
It isn’t, of course. But, as the master himself says, it’s also not a very effective way of achieving the policy of narrowing the wealth gap.
There will always be millionaires and billionaires in America — that is, if we don’t let Marxist opportunists like Warren, Bernie Sanders, and Alexandria Ocasio-Cortez gain power and destroy our capitalist system. But taxing people who are success, as the man who developed the concept notes, isn’t the way to achieve higher wage growth for most Americans.
President Trump has done more to ‘fix income inequality’ than any Democratic president before him and any one of the socialist/Communist revolutionaries running against him. He’s accomplished this by lowering taxes and implementing economic policies that have led to stellar job growth, which has led to substantially more opportunities for all Americans and higher pay.
In a second term, Americans and our country should see the pro-growth effects of Trump’s trade deals and renegotiations, as well as continued growth in the fossil fuel energy sector, manufacturing, and construction. And if he continues to blow away the regulatory regime of the Bureaucratic Branch, then Americans will be even better off.
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