The Problem with Elizabeth Warren’s Wealth Tax

02/09/2019           

“America will never be a socialist country,” President Donald Trump proclaimed in this week’s State of the Union Speech. Regardless of how much truth we see in this statement, there is little question who these words were directed at. As the Democratic Party has shifted continuously to the left over the last years, it has welcomed politicians to its club who dub themselves as flat-out socialists. Today’s stars of the Democrats are not the Clinton’s and Pelosi’s anymore, but Bernie Sanders, Alexandria Ocasio-Cortez, and Kamala Harris.

All of them have their own grand, ready-made solutions to all of America’s problems. The newest is the idea of a wealth tax, which Elizabeth Warren presented and heavily promoted in recent days. The general idea of her plan is that the value of the wealth of the extremely-rich (or, in her sense, the “too-rich”) should be taxed, for households with over 50 million dollars by two percent, for those with over one billion dollars by three percent. In total, 75,000 households, a proud figure, would be affected, and it is this wealth tax that Warren sees as one of her centerpieces in, as she says, levelling the playing field.

A wealth tax is not a new idea, though it certainly has come out of fashion recently – in 1992 twelve OECD countries had one, now there are only four.

One of the central issues of a wealth tax is that it is difficult to actually implement and enforce. As Nicole Kaeding and Kyle Pomerleau from the Tax Foundation write, “the uber wealthy tend to have very hard-to-value assets,” such as ownership in real estate holdings, trusts, and most importantly, businesses.

Calculating the overall value of the wealth of a household would cost an immense amount of time and effort. Jeffrey Levine notes that wealthy households own “one of a kind works of art, ‘priceless’ jewelry, expensive cars … the list goes on and on. And now imagine the need to have all these assets valued each and every single year. It would be a total disaster show.” What effect such a measurement would have on a tax code which already comes in at 2.4 million words can already be presumed. The only ones profiting from such additional complications would be appraisers and lawyers, who will have the privilege to find out what the value of one’s wealth even is approximately.

Considering that wealth is not homogenous in kind, it would also lead to some households being hit much harder than others. It is one thing to sacrifice the least bad items of your investment portfolio or use inherited money to pay the tax. It is tougher to obtain the same amount of money if you are a business owner, who needs profitable returns year in, year out. In contrast to higher income tax rates, a wealth tax would also have a much more significant effect on one’s tax burden, since an annual tax on wealth would affect ones entire wealth every year, rather than “just” the newly accumulated income.

Of course, Elizabeth Warren not only wants to implement a wealth tax for being on the search for new funding of her costly projects, but also because “the rich” don’t pay their “fair share.” Disregarding the questionable assumption that letting those who are successful pay a much bigger share than the others would be fair, “the rich” already pay much more than the rest of the population anyway. Even Warren is admitting that when shesays that the top 0.1 percent pay 3.2 percent of total taxes, which is more than six times the share as the bottom 50 percent. The top 1 percent, meanwhile, pays a greater share of income taxes than the bottom 90 percent combined.

All of this is not to say that Elizabeth Warren is wrong when she says that “Washington is broken.” She is right when she says, like in a recent Bloomberg interview , that the system is stacked against the Average Joe, that “right now it works if you are a billionaire” or a “giant multinational corporation” or someone who is “wealthy” and “well-connected.” That the system is broken is one of the main reasons why someone like Donald Trump could ever become President (or even have a chance).

But the reason for this is not that government isn’t doing enough so far. It is instead that the government is doing too much, regardless of whether we talk of regulations and laws that are influenced by politically well-connected corporations and lobbyists, of a political elite that is wholly disconnected from their voting population, and certainly also of a financial system from which, every day, some profit from, while normal people further down the ladder lose out.

Not only that Washington is broken, however – it is broke as well at the tune of 22 trillion dollars. Warren’s wealth tax would raise 2.75 trillion dollars over the next ten years which she intends to not use on paying off debt, but on more spending on child care, lowering the student loan debt, and the “ Green New Deal .” Indeed, no confiscation from “the rich” of any kind could finance any programs for long. As Antony Davies noted , confiscating, for instance, the entire wealth of the 550 billionaires in the US, which would raise 2.5 trillion dollars, would be just enough to run the federal government for less than eight months. Washington’s problem is not revenue then, but spending.

So while Elizabeth Warren may be correct that the system is broken, she is quite wrong in how and why it is broken, and how to fix it. Instead of intervening even more in people’s affairs as she proposes, fixing the system would mean taking the state out of the system and, when not feasible, at least decentralize it away from Washington to state and local governments.

“Capitalism without rules is theft,” Warren says. But instead of financing “the Swamp” even more, real capitalism (i.e., a free market system based on private property rights and voluntary exchange) might just be the way to fix the system.

 

Kai Weiss is the Research and Outreach Coordinator at the Austrian Economics Center and a board member of the Hayek Institute. Follow him on Twitter.

 

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Big Moldova Elections Coming! Mega-Shift! Moldova Turning Back to Russia?

Futurist Trendcast

HEADS UP! The Moldavian elections are coming in a couple of weeks. Despite a small size and economic weakness of the country, its super-important geopolitical position makes Moldova a true harbinger of change and a swing state bar none! The Moldavian choice will influence Ukraine, post-Soviet Space, the Balkans and Europe! For Russia, Moldova suddenly became an important country, as relations with Ukraine soured.

For several years, as I predicted, Moldova existed in a state of an uneasy equilibrium, where the oligarchy, PM and parliament were in direct and tough confrontation against President Dodon and the people. But this may change in less than a month!

Before elections, I am preparing NEW BIG MOLDOVA REPORT, including analysis of the current political spread, my best insider intel, and multidimensional calibrations of President Igor Dodon.

The expanded calibrations and multidimensional profile of President Dodon, plus Moldova’s calibrations for the country as a…

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FREE! MOLDOVA SHIFT & Igor Dodon, the Putin of E. Europe (BIG Multidimensional Geopolitics Report, Quantum Calibrations & Election Predictions)!

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February 11, 2019 ANNOUNCEMENT!

NEWLADA RAYBOOK RELEASE COUNT-DOWNHAS BEGUN!

Watch for FREE previews, sneak-peeks, insights and articles!

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I confess, in the title I initially wanted to call Dodon ‘The Trump of E. Europe.’ In many ways he is like Trump: he was brought to power by people’s vote, despite powers that be who were in staunch opposition; he tries to implement change in direct opposition to the parliament and elites, not to mention the US and EU. But he also doesn’t act like Trump in many ways. Where there is conflict he seeks peaceful resolution and reconciliation, where there is a problem he personally tries to find a good compromise and mutually profitable solution. He doesn’t start wars, he…

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In Venezuela, White Supremacy is a Key to Trump’s Coup

By Greg Palast

February 10, 2019 “Information Clearing House” –  On January 23, right after a phone call from Donald Trump, Juan Guaidó, former speaker of Venezuela’s National Assembly, declared himself president. No voting. When you have official recognition from The Donald, who needs elections?

Say what?

I can explain what’s going on in Venezuela in three photos:

First, we have Juan Guaidó, self-proclaimed (and Trump-proclaimed) president of the nation, with his wife and child, a photo prominently placed in The New York Times.

Next, the class photo of Guaidó’s party members in the National Assembly, white as snow…

…especially when compared to their political opposites in the third photo, the congress members who support the elected President Nicolás Maduro. The Maduro supporters are nearly all of a darker hue.

This is the story of Venezuela in black and white, the story not told in The New York Times nor the rest of our establishment media. This year’s so-called popular uprising is, at its heart, a furious backlash of the whiter (and wealthier) Venezuelans against their replacement by the largerMestizo (mixed-race) poor.

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Four centuries of white supremacy in Venezuela by those who identify their ancestors as European came to an end with the 1998 election of Hugo Chavez who won with the overwhelming support of the Mestizo majority. This turn away from white supremacy continues under Maduro, Chavez’ chosen successor.

In my interviews with Chavez for BBC beginning in 2002, he talked with humor about the fury of a white ruling class finding itself displaced by dark-skinned man who was so visibly “Negro e Indio,” a label he wore loudly and proudly.

Why did the poor love Chavez? (And love is not too strong a word.) As even the US CIA’s surprisingly honest Fact Book states:

“Social investment in Venezuela during the Chavez administration reduced poverty from nearly 50% in 1999 to about 27% in 2011, increased school enrollment, substantially decreased infant and child mortality, and improved access to potable water and sanitation through social investment.”

What should be added is that, even more than the USA, race and poverty are linked.

But just as Maduro took office in 2013, the price of oil began its collapse, and the vast social programs that oil paid for were now paid for by borrowing money and printing it, causing wildinflation. The economic slide is now made impossibly worse by what the UN rapporteur for Venezuela compared to “medieval sieges.” The Trump administration  cut off Venezuela from the oil sale proceeds from its biggest customer, the USA.

Everyone has been hurt economically, but the privileged class’s bank accounts have becomenearly worthless. So, knowing that the Mestizo majority would not elect their Great White Hope Guidó, the angry white rich simply took to the streets — often armed. (And yes, both sides are armed.)

I’ve seen this movie before. When I look at today’s news reports of massive demonstrationsagainst the so-called “dictatorship” of Venezuela’s left government, it looks awfully like 2002, when I was first in Caracas reporting for BBC Television.

Then, The New York TimesNPR and other mainstream outlets in the US reported on marches against the Chavez government, showing the tens of thousands of Venezuelans calling for Chavez’s removal. But when I took my BBC camera crews to march with these protesters, they were clearly from the light-skinned minority. They were also the wealthy — and they wanted you to know it. Many of the women marched in high heels, the men peacocking in business suits, proudly displayed in the uniforms of their privileged class.

The Chavistas wore patriotic yellow, blue and red T-shirts, sneaks, jeans.

Race was an issue as much as political philosophy. When I marched alongside the opposition demonstrators, they shouted “Chavez, Monkey!” and worse.

Many in the US have never heard this story of race war in Venezuela (and war is what it is), as the US press does not recognize its own racial bias. In 2002, as today, the massive demonstrations of the whiter Venezuelans were reported as evidence that Chavez was wildly unpopular. Yet, the day after each anti-Chavez march, I would witness and film the pro-Chavez demonstrations that flooded Caracas with an ocean of nearly half a million marchers, overwhelmingly poor Mestizos, that received little or no coverage in the US press.

The bias continues. The New York Times did not run a photo of this past week’s pro-Maduro demonstrations. But in hard-to-find photos and reports from my colleagues on the ground, the Chavista demonstrations are bigger, involving mass turnouts in several cities, not just wealthy neighborhoods in Caracas

How many western news outlets showed the massive marches in Venezuela protesting the US-backed coup today? #HandsOffVenezuela pic.twitter.com/YBQpqbdEfl

— Abby Martin (@AbbyMartin) February 2, 2019

Why do the poor march for Maduro? Even though the Mestizo majority suffers today, they will not turn back to the pre-Chavez days of de facto apartheid.

And we must remember this is not the first time the US government has tried to overthrow the elected government in Venezuela.

In 2002, George W. Bush’s State Department cheer-led the coup. The plotters kidnapped Chavez and held him hostage. The coup was led by an oil industry leader and head of the Chamber of Commerce, Pedro Carmonawho had seized the nation’s White House, and, like Guaidó today, declared himself president. Carmona told me proudly about the fancy inaugural ball held by the nation’s elite and attended by Bush’s ambassador.

But the Bush/Carmona coup collapsed when a million darker-skinned Venezuelans flooded the capital and forced the plotters to return their hero, the supposedly unpopular Chavez, to Miraflores, the Presidential Palace. “Presidente” Carmona fled.

Today, Guaidó’s supporters, like Carmona’s, know they can’t win an election given the overwhelming fact of the newly empowered Mestizo majority. So Guaidó has skipped the idea of an election altogether, simply replacing running for office with the “recognition” from Trump and allies which Guaidó can’t get from Venezuelans.

When I see the images and hear the chants of the anti-Chavista demonstrators now, I’m also reminded of what I saw at a Trump rally in Macon, Georgia, this past November. The president slid out of Air Force One to tell the crowd  — heavily weighted with white supremacists — that they needed to take back their country from those “invading” the border. Trump told them to fear gubernatorial candidate Stacey Abrams, who is Black, saying she would “turn Georgia into Venezuela.”

I don’t think Trump was talking about Abrams’ program to bring universal health care to Georgia, as Chavez did for Venezuela.

The US press is quick to condemn the racial hatred on display at Trump rallies. But I have yet to hear or read in the US press what our eyes can see in the three photos from Venezuela: an uprising of white people wanting to “take back their country.”

And take note: The Venezuela putsch by the wealthy, internationally connected minority is operating by a regime-change plan designed by neo-con re-tread John Bolton, Trump’s national security adviser. And take further note: It is a plan to control Venezuela and its oil, as Bolton proudly proclaims in the open.

Ah, yes, the oil. It’s always the oil. And Venezuela has plenty to seize: the world’s largest reserves.

We’ll get to that in Part II.

Note: Greg Palast covered Venezuela during the Chavez presidency for BBC Television Newsnight and The Guardian. Download the film of Palast’s BBC reports, The Assassination of Hugo Chavez, for FREE or with a donation to the Palast Investigative Fund. This article incorporates additional reporting by William Camacaro in Caracas. https://www.gregpalast.com/

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==See Also==

Racism And The Fight Over VenezuelaThe U.S. coup attempt in Venezuela is not only about oil and general U.S. imperialism.

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 The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of Information Clearing House.

An Open Letter To The People Of The U.S. From President Nicolás Maduro

By Nicolás Maduro

February 10, 2019 “Information Clearing House” – If I know anything, it is about the people, because just like you, I am a man of the people. I was born and raised in a poor neighborhood of Caracas. I was forged in the heat of popular and union struggles in a Venezuela submerged in exclusion and inequality. I am no tycoon; I am a worker of mind and heart.  Today I have the great privilege of presiding over the new Venezuela, rooted in a model of inclusive development and social equality, which Comandante Hugo Chávez forged starting in 1998, inspired by the legacy of Simón Bolivar.

We are living today in a historical crossroad. There are days that will define the future of our countries, giving us a choice between war and peace. Your national representatives of Washington want to bring to their borders the same hatred that they sowed in Vietnam. They want to invade and intervene in Venezuela — they say, as they said then — in the name of democracy and freedom. But this is false. Their history of the usurpation of power in Venezuela is as false as the weapons of mass destruction in Iraq. It is a false argument, but it can have dramatic consequences for our entire region.

Venezuela is a country that, by virtue of its 1999 Constitution, has broadly expanded the participatory and protagonist democracy of the people, and that in an unprecedented way so that today Venezuela is one of the countries that has held the largest number of elections in the last 20 years. You may not like our ideology or how our society looks, but we exist and we are millions.

I address these words to the people of the United States of America to warn of the gravity and danger that some sectors in the White House intend, that is, to invade Venezuela with unpredictable consequences for my country and for the entire American region. President Donald Trump also intends to disrupt the worthy initiatives to open a dialogue promoted by Uruguay and Mexico, with the support of CARICOM, for a peaceful solution and dialogue on behalf of Venezuela. We know that for the good of Venezuela we have to sit down and talk because to refuse to dialogue is to choose the path of force. Keep in mind the words of John F. Kennedy: “Let us never negotiate out of fear. But let us never fear to negotiate.” Those who do not want to dialogue, are they afraid of the truth?

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The political intolerance toward the Venezuelan Bolivarian model and the desires for our immense oil resources, minerals and other great riches have prompted an international coalition headed by the U.S. government to commit the serious insanity of waging a military attack on Venezuela under the pretext of a nonexistent humanitarian crisis.

The people of Venezuela have painfully suffered social wounds caused by a criminal commercial and financial blockade, which has been aggravated by the dispossession and robbery of our financial resources and assets in countries aligned with this demented onslaught.

And yet, thanks to a new system of social protection, of direct attention to the most vulnerable sectors of our society, we proudly continue to be a country in the Americas with high human development index and low inequality.

The U.S. people must know that this complex multiform aggression is carried out with total impunity and in clear violation of the Charter of the United Nations, which expressly outlaws the threat or use of force, among other principles and purposes, for the sake of peace and friendly relations between nations.

We want to continue being business partners of the people of the United States, as we have been throughout our history. Their politicians in Washington, on the other hand, are willing to send their sons and daughters to die in an absurd war, instead of respecting the sacred right of the Venezuelan people to self-determination and to safeguard their sovereignty.

Like you, people of the United States, we Venezuelans are patriots. And we shall defend our homeland with all our soul. Today Venezuela is united in a single cry: We demand the cessation of the aggression that seeks to suffocate our economy and socially suffocate our people, as well as the cessation of the serious and dangerous threats of military intervention against Venezuela.

We appeal to the good soul of U.S. society, a victim of its own leaders, to join our call for peace. Let us be all one people against warmongering and war.

Long live the peoples of America!

Nicolás Maduro

President of the Bolivarian Republic of Venezuela

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Note To ICH Community

We ask that you assist us in dissemination of the article published by ICH to your social media accounts and post links to the article from other websites.

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Peace and joy

 The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of Information Clearing House.