Candidates on the far left are proposing to tax the rich — big time. They need revenue to fund their massive spending plans and also want to deliver their version of economic justice to the country. Senator Elizabeth Warren says, “we want to build an America that works for the people, not one that just works for rich folks.”
She has unveiled tax proposals that, added together, would push federal tax rates for some multi-millionaires and billionaires above 100 percent.
Senator Bernie Sanders wants an annual tax of 1 to 8 percent on the wealth of joint filers whose assets are valued at $32 million or above.
Columnist Megan McArdle of the Washington Post finds it strange that Senator Warren is so appealing to affluent voters. She points out that “there is one thing a wealth tax can do better than anything else: destroy fortunes.”
Both Senators Warren and Sanders ignore the fact that Europe has tried wealth taxes and mostly rejected them because they didn’t work.
Sweden’s 70’s-era wealth tax was relatively small but still drove out some of the country’s brightest citizens, like IKEA founder Ingvar Kamprad, before the country repealed it.
Germany had a .5 to .7 percent tax on personal and corporate wealth for nearly 2 decades, before dropping it. Some on the left want to reimpose it. But studies show this would shrink Gross Domestic Product by 5 percent and employment by 2 percent.
Some 70,000 millionaires have left France since 2000 because of its wealth tax.
Of the 12 European countries that had wealth taxes in 1990, only three have them today. The revenue raised just wasn’t worth the administrative burden or the damage to the economy and the jobs picture.
The wealth tax is immoral. It’s a confiscatory tax on assets accumulated from work, thrift and investment that have already been taxed once. The Wall Street Journal calls it “the ultimate populist envy tax.”