President Donald Trump is in the middle of starting his campaign run for President in 2020. It appears that his main rival will be Senator Elizabeth Warren of Massachusetts, one of her main proposals if she is made President of the US is her Wealth Tax. Essentially, it is a 2% tax on a family’s wealth if that family’s wealth should exceed $50 million.
Once your family is worth over $1 billion, there will be an extra sub charge of 1%, obviously Elizabeth Warren isn’t the first person in US history to propose such a wealth tax, and she will definitely not be last.
Is the wealth tax worth it?
Although to those family’s who don’t come anywhere the $50 million threshold, the wealth tax seems fair, and they often call for it, but for family’s that have aspirations to reach the $50 million threshold (essentially all middle-class households in the US).
Regardless of your stance, the wealth tax will not work, this is due to the rich’s favourite way to make and keep their money. Corporations. Contrary to popular belief, doctors and lawyers are not the 1% that would be affected, as they are not part of the 1%, the 1% are the millionaires and billionaires of the world, the ones who have generational wealth.
There was a documentary done by DW, where they looked into generational wealth in Germany, the richest families in Germany today, are the same families that were the richest over 200 years ago, and as such it is the premise behind the tax on inheritance that the US has, something that has come under fire recently by people such as Donald Trump and Mitt Romney, for essentially being an unfair ‘death tax’ which attacks farmers, as well as the wealthy.
The 1% that would be affected, would simply do what all large corporations do, move their headquarters to what is known as a ‘Tax Haven’ which is essentially somewhere with little to no taxes, such as the Cayman Islands, Bermuda or the Netherlands.
So all that the richest families in the United States (and any other countries that may choose to follow the US’s footsteps) would simply move abroad along with their money, and Warren’s Wealth Tax will die alongside the nation’s economy, and the US’s reputation as the world’s leader in Entrepreneurship and Business.
But before we can even say what would definitely happen, we have to establish the likelihood of such a bill even passing through Congress or the Senate: highly unlikely.
Why? The American Dream. Because of the belief in the US that everyone can get ahead if they just work hard enough, and as such, everyone thinks that one day, the wealth tax will apply to them, so they block any form of legislation that would harm the wealthy.
It isn’t just the US that has had propositions for a wealth tax, for years many countries in Europe had a wealth tax: Austria, Spain, Luxembourg, Sweden and Germany are just some of the European countries that had wealth taxes that abolished them, in large part due to the lack of funds raised by them.
There are also many questions as to the legalities and whether the constitution would allow for a Federally administered Wealth Tax, a sentiment that has been renewed since Senator Elizabeth Warren revealed her intentions to have a Wealth Tax should she be elected to office.
Some political analysts we spoke, such as the analyst who wishes only to be named as ‘John’ for personal and professional reasons, speculates that a ‘Wealth Tax’ such as the one suggested by Elizabeth Warren, may simply be a way to attract young voters, and the poor voters who believe that they would stand to gain from a wealth tax being implemented.
But then, in January this year, The New Yorker published an article titled “Why Elizabeth Warren’s Wealth Tax Would Work.” It essentially talks about how an economist called Edward Wolff published a book on this issue, and no one really took notice of it, and how now, Alexandria Ocasio-Cortez, Bernie Sanders and Elizabeth Warren have all taken notice of Wolff’s book, and now preach a wealth tax.
Yet the problem is that a Federally administered Wealth Tax will never work. No matter how popular a bill like this would be with African-Americans and young people (the people with the most disparity in income), big corporations will justifiably stop it, whether they move abroad to places like Switzerland, the Cayman Islands or Bermuda, or whether they rightfully lobby for the rich tax to be forgotten should Elizabeth Warren be elected to office. But what if the wealth tax is passed?
Some may ask, according to John, a few things might happen: 1. Corporations leave the US, which leads to mass unemployment, and an unrivalled economic recession, on par with The Great Depression of the 1930’s 2.
Nothing, the people who stand to lose the most, just find some way to avoid paying it, such as moving their assets abroad, so that the wealth tax will never apply to them or their family, 3. It never actually collects all the money that Elizabeth Warren says that it will, and then the bill is repealed, and is called ‘a failed experiment’.
What happens if the Wealth tax passes?
If the Wealth Tax is passed, the outcome is not particularly favourable, if the bill passes, the US, and likely the rest of the world will suffer a prolonged and damaging economic recession only matches by The Great Depression, and if it doesn’t pass, the outcome is much more favourable, no economic depression and no mass job loss.