It’s time once again to play one of our favorite hypothetical games: What would the Democratic presidential candidate’s specific plan look like if he/she were to win the 2020 election?
We introduced this game a few months ago when we tackled candidate Andrew Yang’s idea of giving every American household a monthly stipend to help reduce the poverty rate. And in this edition of the game, we’ll zero in on the presumed current Democratic front-runner, Senator Elizabeth Warren, and her idea of imposing a wealth tax on the mega rich.
Warren’s plan isn’t unlike many other Democratic tax plans, which propose increased taxes on those who can comfortably afford it, but it takes specific aim at people like billionaire Jeff Bezos and his company, Amazon, which reportedly doesn’t pay anything in taxes. Warren believes that’s a big problem, and she thinks her wealth tax would help fix things and right this wrong. Without further ado, let’s take a closer look at Warren’s wealth tax concept and how it might impact you.
The Wealth Tax Explained
Essentially, Warren’s wealth tax plan would only impact the extremely wealthy as a means of funding social programs, like universal health care or free college tuition, and offsetting income equality. Specifically, it would impose an additional 2 percent tax on individuals worth more than $50 million and an additional 6 percent tax on those worth more than $1 billion. The Massachusetts senator says it would apply to 0.1 percent of the total population, or about 75,000 American households.
So, why does Warren want to impose this tax? She thinks it’s wrong that people like the aforementioned Bezos, whose company relies on the roads, infrastructure, and workforce to become as successful as it is, doesn’t pay anything in taxes. She also believes that the tax will help close the gap between the super rich and everyone else by funding social programs that all Americans can benefit from.
What Would a Wealth Tax Mean for You?
Should Warren win the 2020 election and her plan pass through the House of Representatives and Senate, it would only impact you if you’re among those worth more than $50 million or $1 billion. If you fall below this type of income level, which 99.9 percent of all Americans do, you would not be effected directly, however you may be impacted indirectly.
That’s because many speculate that a wealth tax would result in fewer self-made individuals, essentially making it more difficult for people to become millionaires and billionaires. And if this were the case, opponents argue, it could impact economic growth. Furthermore, many opponents of Warren’s plan see billionaires dodging this tax in some way, such as relocating operations in a state that doesn’t have a state income tax to offset what they’d pay in a wealth tax. Something similar happened in California in 2012 when about 0.8 percent of Californians in the top tax bracket who were impacted by higher taxes moved elsewhere, largely to states without an income tax.
What to Keep in Mind
It’s important to note a few things when we take a look into the hypothetical future. One, it’s all hypothetical — Warren hasn’t won the election (or even secured the Democratic nomination) and her wealth tax plan could still change from now up until November 2020 if she stays in the race. However, it’s important for everyone to understand what they’re voting for and what they’re voting against, especially as things are really set to get moving from now and up to the 2020 Presidential election. And two, even if Warren were to win the election, her plan would have to pass both the House and Senate before she could sign it into law, much like how the Tax Cuts and Jobs Act did before it was signed by President Trump around Christmas of 2017.
What’s your take on a wealth tax? Do you think it’s the responsibility of the mega rich to chip in more for the benefit of everyone else than what they’re doing right now? Or do you think it’s a bad idea that could stifle economic growth? Perhaps most importantly, would it impact you?