Wealth Tax: Sen. Warren's Latest Bad Idea Will Slow Growth And Kill Jobs

Investor's Business Daily editorial.

"Taxes: Hand it to the all-new, far-left Democratic Party: They're not short on bad ideas. On the heels of Rep. Alexandria Ocasio-Cortez's plan to tax "the rich" at 70% or higher, comes Sen. Elizabeth Warren's idea to also impose a wealth tax on those at the top.

In the case of Warren, she says "economists" estimate her proposed 2% tax on those with more than $50 million in wealth, 3% for billionaires, will produce a gusher of revenue over 10 years, $2.75 trillion to be exact. It won't happen.

Warren calls her plan to seize the wealth of the top 0.1% the "Ultra-Millionaire Tax." The economic illiteracy of this baby-step toward socialism is stunning.

Believe it or not, wealthy people get that way because they work hard, take risks and are clever with money. They won't willingly hand their hard-won generational wealth over to the ditzy leftist spendthrifts in Washington, D.C. By the time the IRS gets around to confiscating it (part of the Warren plan), the wealthy will have put their money into untaxable or sheltered domestic investments, or removed it from the U.S. entirely.

The plan is deceitful. As always, Democrats will target the wealthy for higher taxes, but make sure that generous loopholes will let their rich friends — that is, Democratic contributors — escape. Meanwhile, it's sold to middle-class voters as "fairness" or "reducing inequality" or "fighting for the little guy."

Wealth Tax: It's About Envy

In fact, it's really something as old as civilization itself, and one of the Seven Deadly Sins: Envy.

The tragedy of all this, of course, is that the envious among us who shout "right on, take their money" will be hurt most by it. As we've noted many times before, anything you tax, you get less of. Put a tax on someone's wealth, and you'll get less savings, investment and wealth. Those with wealth and know-how if threatened will, in essence, go on strike.

Sadly, those who now say "right on, take their money" will soon be saying, if it's passed, "dude, what happened to my job?" As the American Enterprise Institute noted, a 2014  Tax Foundation study  of a similar plan from economist Thomas Piketty found GDP growth would shrink by half a percentage point each year. Meanwhile, in "The Wealth Tax and Economic Growth," looking at 20 OECD countries with wealth taxes, Swedish economist Asa Hansson found a one percentage point increase in wealth taxes  reduced economic growth by 0.02 to 0.04 point.

In short, slower growth equals fewer jobs and lower incomes. Americans shouldn't be fooled by this class-warrior rhetoric. These aren't really "wealth" taxes; they're envy taxes. And envy taxes are a terrible idea, one that won't make wealth more equal, but will make all of us more miserable."