This article originally appeared on the Wall Street Journal on November 11, 2019.
Sen. Elizabeth Warren is campaigning for a 2% surtax on anyone’s net worth over $50 million and 6% on more than $1 billion. Most discussion of the wealth tax has focused on whether it could generate sufficient revenue to fund Ms. Warren’s various spending plans, and the revenue likely would be far less than she projects. But that focus overlooks the ways the massive new tax would harm all Americans.
If you take comfort in Ms. Warren’s claim that her tax would apply only to the wealthiest Americans, think again. In 1913 the progressives of that era sold a federal income tax with the same pitch, saying it would be drawn only from the very wealthy. In the first year a mere 2% of households filed tax returns. Five years later 20% had to file returns, and by the 10th year nearly 40% did.
“Gullible” is inadequate to describe anyone who believes Ms. Warren and other progressives would resist the temptation to apply a wealth tax to a much broader swath of savers. Given the scope of her proposed government expansion, the tens of trillions in new spending would demand it.
All this assumes that the government would be able to assess the wealth tax to begin with, but experience gives reason for doubt. Twelve European countries had a wealth tax in 1990, but only three maintain one today, largely because implementation problems and negative effects proved insurmountable.
Click here to read the full article.