Elizabeth Warren's Eat-The-Rich Tax Proposal Has Usual Suspects Whining. GOOD.
What with a bunch of entitled assholes running everything, expecting to be rewarded with a pat on the head for handing out a Big Fat Tax Cut for Rich Fuckwads in 2017, and generally fucking over the country for the past two years, there seems to be a fair bit of enthusiasm for proposals that would impose just a leetle bit of taxation on the obscenely wealthy, like Alexandria Ocasio-Cortez's call for a top marginal income tax rate of 70 percent, or Elizabeth Warren's call for an all-new tax on those with net worth over $50 million. Paul Krugman offered his support for the latter yesterday on the Twitters, saying that despite the inevitable cries of doom from the supply-side crowd, Warren's plan is "actually very smart -- as you would expect given the source."
Krugman linked to a fine nerdy thread about the wealth tax proposal by NYU Law professor David Kamin, who served as Barack Obama's special assistant for economic policy, a position in which we're fairly sure he never said government workers going without pay were "volunteering." Kamin explains that a wealth tax would address one of the big shortcomings of the income tax when it comes to making sure the wealthy pay their fair share. Since the super-wealthy may not actually get a paycheck, income tax allows them to have huge wealth that's taxed at a far lower rate than Jane Worker, as Kamin plains:
The very top get a lot of their income from sale of property (sometimes mixing in their labor like a founder of a company). We only tax when sold ("realized") and if they hold until death, then basis steps up and the gain is never taxed ("step up").
As a result: folks at the very top can sit on huge gains, borrow to finance their lifestyles, and then have the gains go "poof" when they die.
The Warren plan would tax the net worth of people with assets over $50 million at 2 percent a year, plus another 3 percent on fortunes over a billion dollars. And it would apply to all assets -- even the wealth hidden outside the US to avoid income tax. There would be some wrinkles to work out, like how the IRS would get an accurate measure of those assets, but that would be doable, he says. (You nerds can enjoy even more tax geekery in threads by tax mavens Chye-Ching Huang and Lily Batchelder -- who link to even more nerdery!)
As one f'rinstance of how a wealth tax (we really need a better name with more bite, though), Bloomberg News did a quick estimate of how a bunch of American billionaires would fare, and by golly, it looks like they'd manage to pay the tax and -- this is big! -- still remain super-ugly rich!
Jeff Bezos, the world's richest person, would have to pay $4.1 billion in the first year under U.S. Sen. Elizabeth Warren's proposed wealth tax, based on his current net worth of $137.1 billion.
The piece notes that Bezos's wealth is mostly tied up in Amazon stock, so he might have to sell a few shares, but even so, he'd get by, considering that in the first 25 days of 2019 alone, his wealth has grown by $12 billion -- dude's wealth increases by about $11.5 million per hour. Or if you prefer, $275 million a day.
As long as he knows how to love, I know he'll be all right. And in total, the 174 Americans on the "Bloomberg Billionaires Index," which ranks the world's 500 richest people, would collectively owe $61 billion. It's a good start!
For completely full-goose bozo rightwing panic, it was hard to top GOP strategist/pollster/dollop of stomach acid Patrick Ruffini, who had THOUGHTS on the incalculable damage Warren's 2 percent tax would do. You see, it would just whittle all the wealth away, year after year, until it was all gone, because it would be like compound interest in reverse!
Don’t call Warren’s tax a 2% tax. Over 10 years it would wipe out 18% of wealth over $50M and over 50 years it woul… https://t.co/qGFOnZCaiV— Patrick Ruffini (@Patrick Ruffini)1548381943.0
He said a bunch more stupid stuff, but let's take a quick moment to note the really big tell in Ruffini's final line: "that's not taking into account the returns on these assets." Which is rather a big deal to leave out of a tweet claiming that Warren would "wipe out" 82 percent of the value of a huge fortune over 50 years, because the whole point of having a shit-ton of money is that that money tends to grow, not shrink. And ain't no way (barring an economic catastrophe) a fortune over $50 million would gain less than the 2 percent a wealth tax would take annually. As you may recall, the Washington Post pointed out that over ten years under the Warren plan, a fortune of $100 million would still grow a hell of a lot:
By pretending there'd be no returns on a vast fortune, Ruffini is trying to snow people here, as if the 2 percent tax would apply to an ever-shrinking pile of capital. And yes, people called him on it:
@PatrickRuffini Uh, this is all pretty and all but it’s clear you’re assuming those assets have a 0% return over th… https://t.co/hH4TdNByp3— HudsonRiverCroc (@HudsonRiverCroc)1548385695.0
Also, more than one thinkerer in the pile-on pointed out that money that goes to taxes doesn't exactly vanish when it goes to the government, like "POOF!" in a cloud of Harry Potter smoke. They patiently explained taxes go to stuff like roads and schools and air traffic controllers and soljers and wasteful F-35 Fuckup Fighters and even to IRS employees who process your tax return and make sure you get your refund. Like, that's the point.
But Ruffini wasn't the least bit convinced:
@breenj22 Yes, yes they do— Patrick Ruffini (@Patrick Ruffini)1548388722.0
Honestly, we think the "Yes, yes they do" was in answer to "Taxes don't 'wipe out' money," which is insane enough, but we wouldn't be especially surprised if Ruffini actually does believe there's a team of people at IRS offices just tossing bales of nice billionaires' money into a furnace, "FOOM!" because he really, truly believes that only private capital can accomplish anything. Or so he says, on a computer network that came into being because of government spending.
Also, please disregard all the very well-established data about the multiplier effects of government anti-poverty spending, because papa needs another tax cut and maybe someday you'll all thank Republicans for making you rich, the end.
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Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.