Americans could see tax rates of over 100 percent under Warren plan, analysis finds

Some investors could see their rates exceed 100 percent under Democratic presidential candidate Sen. Elizabeth Warren’s tax plan, according to an analysis reported by the Wall Street Journal on Friday.

The Journal says the rates exceeding 100 percent would target top tier investors and result from a combination of different taxes the presidential hopeful is pitching. For instance, Warren is calling for raising the top marginal rate on income taxes to 39.6 percent, a 14.8 percent tax on Social Security, and an annual tax of six percent on accumulated wealth.

Presumably, this would all be in addition to state taxes and her pledge to hike capital gains taxes to much higher ordinary income tax levels.

Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.

The rate would vary according to the investor’s circumstances, any state taxes, the profitability of his investments and as-yet-unspecified policy details, but tax rates of over 100% on investment income would be typical, especially for billionaires.

Warren argues the taxes are necessary to pay for her litany of proposals, including Medicare for All, free college tuition, and public housing.

Her plan would hurt economic growth

Numerous economists have criticized Warren’s tax proposals as excessive in recent weeks.

 GIANCARLO SOPO

Some investors could see their rates exceed 100 percent under Democratic presidential candidate Sen. Elizabeth Warren’s tax plan, according to an analysis reported by the Wall Street Journal on Friday.Ditch the fake news ==> Click here to get news you can trust sent right to your inbox. It’s free!

The Journal says the rates exceeding 100 percent would target top tier investors and result from a combination of different taxes the presidential hopeful is pitching. For instance, Warren is calling for raising the top marginal rate on income taxes to 39.6 percent, a 14.8 percent tax on Social Security, and an annual tax of six percent on accumulated wealth.

Presumably, this would all be in addition to state taxes and her pledge to hike capital gains taxes to much higher ordinary income tax levels.

Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.

The rate would vary according to the investor’s circumstances, any state taxes, the profitability of his investments and as-yet-unspecified policy details, but tax rates of over 100% on investment income would be typical, especially for billionaires.

Warren argues the taxes are necessary to pay for her litany of proposals, including Medicare for All, free college tuition, and public housing.

Her plan would hurt economic growth

Numerous economists have criticized Warren’s tax proposals as excessive in recent weeks.

An analysis from the University of Pennsylvania’s Penn Wharton Budget Model estimates that her wealth tax alone would reduce the country’s economic growth by 0.2 percent each year over the next decade. The study found that annual growth would average out to 1.3 percent instead of 1.5 percent.

Slower economic growth would impair the government’s ability to pay for critical spending priorities such as defense, which Warren has pledged to cut by 12 percent. Another possible byproduct of Warren’s tax plan is that it could trigger a flight in capital and force investors to pull their stock market investments, which may plunge the markets and hurt 401(k) retirement plans, among other things.

As economist and wealth tax expert Edward Wolff has said, the plan is “going to induce a big capital flight out of this country,” adding “Who is going to sit around and see their wealth earning nothing or even in negative territory?”

Even some Democrats agree

Another critic of Warren’s wealth tax is former economist Larry Summers, who worked in the Obama and Clinton administrations. “We do need to study pretty carefully why it is that most of the European countries, who usually are more progressive than we are and had wealth taxes, have decided over the last 15 or 20 years to eliminate those wealth taxes and why almost none of them get anything like the kinds of revenue that Sen. Warren is aspiring to get,” he told CNBC in January.

Meanwhile, in comments that were unmistakably directed at progressives like Warren and Sen. Bernie Sanders (D-Vt.), former President Barack Obama said on Friday that 2020 Democrats’ progressive proposals could alienate voters.

“Even as we push the envelope and we are bold in our vision, we also have to be rooted in reality,” Obama said. Adding, “the average American doesn’t think we have to completely tear down the system and remake it.”

5 thoughts on “Americans could see tax rates of over 100 percent under Warren plan, analysis finds

  1. I’ll be voting Democrat for the Primary Election. This will allow me to vote for anyone in second place behind Omar for Minnesota’s 5th Congressional District. It is unlikely that a Republican can win her seat, because we conservatives are fighting a 2-to-1 battle here. The D’s will vote for D’s, but if Omar doesn’t reach the General Election ballot, I’ll take that as a win.

    I’ll have to calculate the best option for the D’s presidential candidate. Whoever is the best D to lose against Trump will get my vote. This year, MNGOP makes this maneuver possible because they will not allow any GOP challenger to face off against Trump in the Primary Election.

  2. NO! BECAUSE MOST LEGAL AMERICAN WONT VOTE FOR THE LYING DIP STICK THE BRAIN DEAD WILL AND THE BRAIN WASHED SOCIALISTS BELCHED OUT OF THE LEFTS EDUCATIONAL SYSTEM.

  3. Only the lowest of the low classes would see democraps as their heros. Lets hope there arn’t too many in those bottom numbers.

  4. I am sorry for the legals that have come across the border and done it the right way. Warren is going to let everybody come and stay without papers of citizenship[. Warren is giving away our country to these people who are illegal and so for all of you legals, you are working to give the illegals everything free and you wwill be left with almost nothing. Warren is a liar, and she has not sat down and made a list of all the freebies and how much we, the working people will have to give them every week/month in their paychecks. People dont want Medicare for all as it does not cover much of anything. No private insurance, job openings will stop ,buying a house, college, beter public schools, money in the bank as Warren’s plan will take over 60,70, 80% OF YOUR PAY. SOMETIMES I WONDER AS SHE IS FLYING AROUND THE STAGE AND THROWING HER ARMS AND HUGGING EVERYONE, IF SHE IS OF SOUND MIND?

  5. If they can use the voter polls to identify Trump supporters to punish them! Then they can use the same voter polls to identify democrats who voted for them and raise only their taxes. The right thing to do!

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