Massachusetts Senator and Democratic presidential candidate Elizabeth Warren has proposed an annual tax on the assets of America’s wealthiest, a plan that would place a 2 % tax on assets exceeding 50 million dollars. The tax would increase to 3% on assets exceeding one billion.
The proposal, as you would expect, has resulted in an avalanche of criticism being hurled at Senator Warren with many viewing the proposal as yet another expression of Warren’s desire to place the nation on the road to socialism while others complain that this is proof positive that Senator Warren abhors America’s wealthiest.
Yet, it might surprise you to know that Senator Warren is not the first elected official currently serving at the highest levels of the federal government to propose a wealth tax that would hit the assets of the rich – assets that had already been taxed before going into the plus column of the balance sheet.
In 1999, while contemplating a run for the presidency on the Reform Party ticket, Donald J. Trump made the very first proposal of his exploratory presidential campaign- a proposal that would impose a one-time, 14.25 percent tax on the net worth of individuals and trusts worth $10 million or more.
Allow me to repeat that – Donald Trump wanted to make everyone in America who had amassed a fortune in excess of $10 million turn over 14.24 percent of that money to the U.S. government.
Here is an excerpt from President Trump’s book, The America We Deserve, published in 2000, where he addresses the issue:
I would impose a one-time, 14.25% tax on individuals and trusts with a net worth over $10 million. That would raise $5.7 trillion in new revenue, which we would use to pay off the entire national debt. We would save $200 billion in interest payments, which would allow us to cut taxes on middle-class working families by $100 billion a year or $1 trillion over ten years. We could use the rest of the savings — $100 billion — to bolster the Social Security Trust Fund. By 2030, we [will have] put $3 trillion into the trust Fund, which would make it solvent into the next century.
Given that $10 million in 1999 dollars equates to roughly $15 million in 2018 dollars, Trump’s proposal was far more costly to the nation’s wealthiest than what Warren has in mind as Senator Warren’s tax allows the first $50 million to go untaxed. And while Trump’s tax was a one-time hit, that hit called for 14.25 percent of the assets while Warren’s is just 1% a year.
Do the math and you will see that it would take a very, very long time for Warren’s tax to equal the amount Trump was willing to take from the bank and investment accounts of the nation’s wealthiest.
According to 1999 Trump, such a tax would raise enough to pay off the national debt in one year, thereby saving the nation about $200 billion in annual interest payments. The saved interest payments, according to Trump, could be used for tax cuts and ensuring the stability of the Social Security system.
Predictably, the arguments that were being made in opposition to Trump’s idea in 1999 are the same ones being made against the idea today.
“I don’t think the plan makes much economic sense,” said Stephen Moore, director of fiscal policy studies at the libertarian Cato Institute. ”The fact is that most people’s wealth that has been built up over 10, 20 or 50 years is wealth that has already been taxed.”
Ironically, that would be the same Stephen Moore who, today, is a key economic advisor to the Trump Administration and the same Stephen Moore who frequently appears on television to tout the economic prowess of the President.
While 1999 Stephen Moore may not have been as high on Donald Trump as he is today, Mr. Trump was elated with the public’s reaction to his idea.
“The phones are going off the hook,” Mr. Trump reported, as he combined a discussion of his economic ideas with a description of what he called the public’s giddy reaction to his foray into economic policy-making. ”I’ve never seen anything like this. Do you make Page 1 with this one?”
It’s good to see that some things don’t change.
I continue to have some real questions as to the constitutionality (more on that coming) of Senator Warren’s tax proposal. I also have concerns that such a tax would trigger a massive flight of capital to safe harbors where the assets of the wealthy would be beyond the reach of the United States government.
But to those who are busy on social and conservative media hurling invectives at Senator Warren, you might wish to pause a moment to consider that it was just twenty-years ago when your own champion, President Donald J. Trump, favored such a tax and cheered the public’s acceptance of the same.
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