XPost: alt.tv.pol-incorrect, alt.fan.rush-limbaugh, alt.politics.democrats XPost: us.taxes

The income tax is the Swiss Army Knife of the U.S. tax system, an all-
purpose policy tool for raising revenue, rewarding and punishing
activities and redistributing money between rich and poor.

The system could change fundamentally if Democrats win the White House
and Congress. The party’s presidential candidates, legislators and
advisers share a conviction that today’s income tax is inadequate for
an economy where a growing share of rewards flows to a sliver of
households.

For the richest Americans, Democrats want to shift toward taxing their
wealth, instead of just their salaries and the income their assets
generate. The personal income tax indirectly touches wealth, but only
when assets are sold and become income.

At the end of 2017, U.S. households had $3.8 trillion in unrealized
gains in stocks and investment funds, plus more in real estate, private businesses and artwork, according to the Economic Innovation Group, a
nonprofit focused on bringing investment to low-income areas. Most of
the value of estates over $100 million consists of unrealized gains,
said a 2013 Federal Reserve study. Much has never been touched by
individual income taxes and may never be.

Democrats are eager to tap that mountain of wealth to finance
priorities such as expanding health-insurance coverage, combating
climate change and aiding low-income households. Their ideas range from
new rules on inherited assets, to a plan by Sen. Ron Wyden for annual
taxes on unrealized gains, to a proposal from Sen. Elizabeth Warren’s
to tax wealth itself. These come atop more conventional proposals to
raise income taxes and expand estate taxes.

“The whole tax system is stacked in favor of the tax-avoidance crowd,”
said Mr. Wyden, who would lead the tax-writing Finance Committee if
Democrats retook the Senate. “When you stand up and you say, hey look,
you’ve got one system for a cop and a nurse and another for highfliers
to pay what they want to, when they want to, everybody nods.”

The Democratic debate on taxing wealth is one facet of a bigger, often contentious discussion. Experts across the political spectrum agree
income inequality widened in recent decades, and wealth inequality even
more. There is little agreement on what, if anything, the government
should do about it.

Many on the right believe narrowing the gap between the rich and middle
class matters less than raising the incomes of the middle class. That,
they say, calls for measures to boost investment and educational
opportunity. Many conservatives argue that taxes targeted at the rich
could hinder investment in ways that would hurt everyone’s wages and
discourage the creation of wealth in the first place.

New taxes on wealth would complicate tax administration and bring
unknown economic consequences. “It would be incredibly disruptive to
markets,” said Sen. John Thune (R., S.D.). “People would start looking
for how to game it and ways to shield and shelter.”

Liberals, by contrast, see extreme inequality as morally wrong and
socially divisive, and regard the current system, which taxes income
generated by wealth more lightly than wages, as especially
objectionable and a contributor to wealth gaps between blacks and
whites.

While the current income tax is already progressive—rates are higher
for people whose income is higher—Democrats say progressivity breaks
down at the very top because reduced corporate taxes, preferential
rates for capital gains and a narrowed estate tax are especially
favorable to the wealthiest Americans. If Democrats gain unified
control of government in 2021, rich households, including heirs living
off inheritances and company founders compensated with stock, will be
in the crosshairs.

The U.S. has taxed capital gains since introducing the modern income
tax in 1913, when the country decided tariffs and excise taxes were insufficient and unreliable.

Since then, Congress has mostly kept lower tax rates on capital gains
for three main reasons: to offset inflation’s effects, encourage
investment and discourage people from holding onto assets for tax
reasons.

The problem, Democrats say, is that capital gains are taxed only when
gains are realized through a sale and become income. An investor who
buys $10 million in stock that pays no dividend and watches it grow to
$50 million doesn’t pay income tax on that appreciation unless the
stock is sold.

If that investor dies before selling, the unrealized gains get wiped
out, for income-tax purposes. The heirs treat the assets’ cost basis as
$50 million, not $10 million; they face no income tax on the $40
million of capital gains if they sell, although an estate tax may be
due. This long-standing elimination of unrealized gains at death, for
tax purposes, is called “stepped-up basis.”

It means the optimal tax strategy for the very rich, fine-tuned and
promoted by the wealth-planning industry, is straightforward: Hold
assets until death, borrow against them for living expenses and barely
pay income taxes.

Democrats are attacking the foundations of that strategy. They talked
for years about raising taxes on high-income investors, citing Warren
Buffett’s claim of paying a lower tax rate than his secretary. They’ve succeeded in raising the top capital gains rate from 15% under
President George W. Bush to 20%, plus the 3.8% tax on investment income
added to fund the Affordable Care Act. The top ordinary-income rate is
37%.

Just raising capital-gains tax rates further wouldn’t require the likes
of Mr. Buffett to report more of their growing wealth on their returns,
make them more willing to sell assets or raise much revenue. In fact,
if the capital-gains rate went above 28.5% without other changes,
investors would delay so many sales that federal revenue would drop,
according to the Tax Policy Center, a research group.

That would be a rare instance of the U.S. being on the wrong side of
the Laffer Curve, named for economist Arthur Laffer, who projected that government revenue drops if tax rates get high enough.

Republicans see the same money accumulating and want to deploy it by
not taxing it. Their goal, rather than generating money for expanded
government programs, is to incentivize the private holders of capital
to realize the gains and spur economic growth. The 2017 tax law created opportunity zones, which offer deferral and rate discounts for
reinvesting capital gains in low-income areas. GOP lawmakers are
pushing the Trump administration to consider the idea of indexing
capital gains to inflation, reducing taxes on sales of long-held
appreciated assets.

Still, some conservatives are moving closer to Democratic positions. In
June, the Peterson Foundation, which favors budget-deficit reduction,
invited plans from others, and three conservative groups proposed
limiting or repealing stepped-up basis.

The Manhattan Institute’s Brian Riedl said it was the sort of
concession conservatives would be willing to make “in exchange for tax
reform or a grand deal” to curb entitlement spending.

In campaigns, Congress and academia, Democrats are shaping tax plans
for 2021, when they hope to have narrow majorities. There are three
main options.

President Obama left office with a list of ideas for taxing the rich
that might have raised nearly $1 trillion over a decade. The most
important was taxing capital gains at death.

The idea was too radical for a serious look from Congress at the time.
Now, to a Democratic base that has moved left, it looks almost
moderate.

Former Vice President Joe Biden, the candidate most prominently picking
up where Mr. Obama left off, has proposed repealing stepped-up basis.
Taxing unrealized gains at death could let Congress raise the capital
gains rate to 50% before revenue from it would start to drop, according
to the Tax Policy Center, because investors would no longer delay sales
in hopes of a zero tax bill when they die.

And indeed, Mr. Biden has proposed doubling the income-tax rate to 40%
on capital gains for taxpayers with incomes of $1 million or more.

But for Democrats, repealing stepped-up basis has drawbacks. Much of
the money wouldn’t come in for years, until people died. The Treasury Department estimated a plan Mr. Obama put out in 2016 would generate
$235 billion over a decade, less than 10% of what advisers to Sen.
Warren’s campaign say her tax plan would raise.

That lag raises another risk. Wealthy taxpayers would have incentives
to get Congress to reverse the tax before their heirs face it.

Mr. Obama’s administration never seriously explored a wealth tax or a
tax on accrued but unrealized gains, said Lily Batchelder, who helped
devise his policies.

“If someone’s goal is to raise trillions of dollars from the very
wealthy, then it becomes necessary to think about these more ambitious proposals,” she said.

Instead of attacking favorable treatment of inherited assets, Mr. Wyden
goes after the other main principle of capital-gains taxation—that
gains must be realized before taxes are imposed.

The Oregon senator is designing a “mark-to-market” system. Annual
increases in the value of people’s assets would be taxed as income,
even if the assets aren’t sold. Someone who owned stock that was worth
$400 million on Jan. 1 but $500 million on Dec. 31 would add $100
million to income on his or her tax return.

The tax would diminish the case for a preferential capital-gains rate,
since people couldn’t get any benefit from deferring asset sales. Mr.
Wyden would raise the rate to ordinary-income levels. Presidential
candidate Julián Castro also just endorsed a mark-to-market system.

For the government, money would start flowing in immediately. The tax
would hit every year, not just when an asset-holder died. Mr. Wyden
would apply this regime to just the top 0.3% of taxpayers, said
spokeswoman Ashley Schapitl. Mr. Castro’s tax would apply to the top
0.1%.

There are serious challenges. Revenue could be volatile as markets rise
and fall. Also, the IRS would determine asset increases annually,
requiring baseline values and ways to measure change. That’s easy for
stocks and bonds but far more complicated for private businesses or
artwork.

The rules would have to address how to treat assets that lose instead
of gain value in a year, and how taxpayers would raise cash to pay
taxes on assets they didn’t sell. Under Mr. Castro’s proposal, losses
could be used to offset other taxes or carried forward to future years.

Mr. Wyden would include exemptions for primary residences and 401(k)
plans. For assets that aren’t publicly traded, Mr. Castro would impose
taxes only upon a sale, plus a charge applied to limit the benefits of
tax deferral.

“We’re obviously going to spend a lot of time working this through
because when you’re talking about an issue this important, this
substantial, it’s important to get it right,” Mr. Wyden said.

The most ambitious plan comes from Sen. Warren of Massachusetts, whose
annual wealth tax would fund spending proposals such as universal child
care and student-loan forgiveness.

The ultra-rich would pay whether they make money or not, whether they
sell assets or not and whether their assets are growing or shrinking.

Ms. Warren, who draws cheers at campaign events when she mentions the
tax, would impose a 2% tax each year on individuals’ assets above $50
million and a further 1% on assets above $1 billion. Fellow candidate
Beto O’Rourke has also backed a wealth tax, and it is one of Vermont
Sen. Bernie Sanders’ options for financing Medicare-for-All.

Ms. Warren’s plan appeals to some Democrats because it would raise a
lot of money from a tiny number of people. According to economists
working with her campaign, it would generate $2.75 trillion over a
decade from 75,000 households. That would be roughly a 6% boost in
federal revenue from under 0.1% of households.

For Democrats, the Warren plan has advantages: Money would come only
from the very wealthiest. The IRS could focus enforcement on very few
people. Revenue would come quickly.

“Look at Mark Zuckerberg,” said Gabriel Zucman, an economist at the
University of California, Berkeley, who advised Ms. Warren, speaking of
the Facebook Inc. founder. “Are you going to wait 50 years before you
start taxing him through the estate tax?”

In the real world, a wealth tax would emerge from Congress riddled with
gaps that the tax-planning industry would exploit, said Jason Oh, a law professor at the University of California, Los Angeles. For example, if
private foundations were exempted, the wealthy might shift assets into
them.

“We’ve never seen in the history of taxation a pristine tax of any
form,” Mr. Oh said. “People who want to pursue a wealth tax for the
revenue may be a little disappointed when we see the estimates roll
in.”

European countries tried—and largely abandoned—wealth taxes. They
struggled because rich people could switch countries and because some
assets were exempt. Mr. Zucman said Ms. Warren’s tax would escape the
latter problem by hitting every kind of asset, from artwork to stock to privately held businesses to real estate.

While he and fellow economist Emmanuel Saez assume 15% of the tax owed
would be avoided, former Treasury Secretary Larry Summers and
University of Pennsylvania law professor Natasha Sarin wrote a paper
estimating the plan would raise less than half what Mr. Zucman
projects, based on how much wealth escapes the estate tax.

A paper by economists Matthew Smith of the Treasury Department, Eric
Zwick of the University of Chicago and Owen Zidar of Princeton
University contends top-end wealth is overstated. Acccording to their preliminary estimate, the top 0.1% have 15% of national wealth, instead
of the 20% estimated by Mr. Zucman. Their findings imply that Ms.
Warren’s tax might raise about half of what’s promised.

For an investment yielding a steady 1.5% return, a 2% wealth levy would
be equivalent to an income-tax rate above 100% and cause the asset to
shrink. That leads to the criticism that wealth taxes could push people
to seek higher returns, possibly discouraging productive investment and
adding risk to the financial system.

“You hear 1%, 2%, doesn’t sound that much. Paying 1%, 2% on an asset
you have every single year, that can add up,” said Ben Ritz of the
Progressive Policy Institute, a centrist Democratic-affiliated think
tank. “You’re basically having the asset shed money over time.”

To audit 30% of wealthy taxpayers, as Mr. Zucman recommends, would
involve tens of thousands of complex investigations, a challenge even
if the IRS were beefed up as Ms. Warren proposes. The agency already
struggles with similar calculations for estate taxes, engaging in long
battles over valuing such things as fractional shares of family
businesses. Under the wealth tax, those once-per-lifetime audits would
become annual affairs.

The wealth tax also has an extra asterisk: it would be challenged as unconstitutional.

The Constitution says any direct tax must be structured so each state contributes a share of it equal to the state’s share of the population.
A state such as Connecticut has far more multimillionaires per capita
than many others, so its share of the wealth tax would far exceed its
share of the U.S. population. How Ms. Warren’s wealth tax might be
categorized or affected is an unsettled area of law relying on
century-old Supreme Court precedents.

Still, the wealth tax polls well, and Democratic candidates are eager
to draw a contrast with President Trump, a tax-cutting billionaire.

Republicans will push back. Rep. Tom Reed (R., N.Y.) says tax increases
aimed at the top would reach the middle class. “It easily goes down the slippery slope,” he said. “If it’s the 1%, it’s the top 20%.” he said.


--
Watching Democrats come up with schemes to "catch Trump" is like
watching Wile E. Coyote trying to catch Road Runner.

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

XPost: alt.tv.pol-incorrect, alt.fan.rush-limbaugh, alt.politics.democrats XPost: us.taxes

The income tax is the Swiss Army Knife of the U.S. tax system, an all-
purpose policy tool for raising revenue, rewarding and punishing
activities and redistributing money between rich and poor.

The system could change fundamentally if Democrats win the White House
and Congress. The party’s presidential candidates, legislators and
advisers share a conviction that today’s income tax is inadequate for
an economy where a growing share of rewards flows to a sliver of
households.

For the richest Americans, Democrats want to shift toward taxing their
wealth, instead of just their salaries and the income their assets
generate. The personal income tax indirectly touches wealth, but only
when assets are sold and become income.

At the end of 2017, U.S. households had $3.8 trillion in unrealized
gains in stocks and investment funds, plus more in real estate, private businesses and artwork, according to the Economic Innovation Group, a
nonprofit focused on bringing investment to low-income areas. Most of
the value of estates over $100 million consists of unrealized gains,
said a 2013 Federal Reserve study. Much has never been touched by
individual income taxes and may never be.

Democrats are eager to tap that mountain of wealth to finance
priorities such as expanding health-insurance coverage, combating
climate change and aiding low-income households. Their ideas range from
new rules on inherited assets, to a plan by Sen. Ron Wyden for annual
taxes on unrealized gains, to a proposal from Sen. Elizabeth Warren’s
to tax wealth itself. These come atop more conventional proposals to
raise income taxes and expand estate taxes.

“The whole tax system is stacked in favor of the tax-avoidance crowd,”
said Mr. Wyden, who would lead the tax-writing Finance Committee if
Democrats retook the Senate. “When you stand up and you say, hey look,
you’ve got one system for a cop and a nurse and another for highfliers
to pay what they want to, when they want to, everybody nods.”

The Democratic debate on taxing wealth is one facet of a bigger, often contentious discussion. Experts across the political spectrum agree
income inequality widened in recent decades, and wealth inequality even
more. There is little agreement on what, if anything, the government
should do about it.

Many on the right believe narrowing the gap between the rich and middle
class matters less than raising the incomes of the middle class. That,
they say, calls for measures to boost investment and educational
opportunity. Many conservatives argue that taxes targeted at the rich
could hinder investment in ways that would hurt everyone’s wages and
discourage the creation of wealth in the first place.

New taxes on wealth would complicate tax administration and bring
unknown economic consequences. “It would be incredibly disruptive to
markets,” said Sen. John Thune (R., S.D.). “People would start looking
for how to game it and ways to shield and shelter.”

Liberals, by contrast, see extreme inequality as morally wrong and
socially divisive, and regard the current system, which taxes income
generated by wealth more lightly than wages, as especially
objectionable and a contributor to wealth gaps between blacks and
whites.

While the current income tax is already progressive—rates are higher
for people whose income is higher—Democrats say progressivity breaks
down at the very top because reduced corporate taxes, preferential
rates for capital gains and a narrowed estate tax are especially
favorable to the wealthiest Americans. If Democrats gain unified
control of government in 2021, rich households, including heirs living
off inheritances and company founders compensated with stock, will be
in the crosshairs.

The U.S. has taxed capital gains since introducing the modern income
tax in 1913, when the country decided tariffs and excise taxes were insufficient and unreliable.

Since then, Congress has mostly kept lower tax rates on capital gains
for three main reasons: to offset inflation’s effects, encourage
investment and discourage people from holding onto assets for tax
reasons.

The problem, Democrats say, is that capital gains are taxed only when
gains are realized through a sale and become income. An investor who
buys $10 million in stock that pays no dividend and watches it grow to
$50 million doesn’t pay income tax on that appreciation unless the
stock is sold.

If that investor dies before selling, the unrealized gains get wiped
out, for income-tax purposes. The heirs treat the assets’ cost basis as
$50 million, not $10 million; they face no income tax on the $40
million of capital gains if they sell, although an estate tax may be
due. This long-standing elimination of unrealized gains at death, for
tax purposes, is called “stepped-up basis.”

It means the optimal tax strategy for the very rich, fine-tuned and
promoted by the wealth-planning industry, is straightforward: Hold
assets until death, borrow against them for living expenses and barely
pay income taxes.

Democrats are attacking the foundations of that strategy. They talked
for years about raising taxes on high-income investors, citing Warren
Buffett’s claim of paying a lower tax rate than his secretary. They’ve succeeded in raising the top capital gains rate from 15% under
President George W. Bush to 20%, plus the 3.8% tax on investment income
added to fund the Affordable Care Act. The top ordinary-income rate is
37%.

Just raising capital-gains tax rates further wouldn’t require the likes
of Mr. Buffett to report more of their growing wealth on their returns,
make them more willing to sell assets or raise much revenue. In fact,
if the capital-gains rate went above 28.5% without other changes,
investors would delay so many sales that federal revenue would drop,
according to the Tax Policy Center, a research group.

That would be a rare instance of the U.S. being on the wrong side of
the Laffer Curve, named for economist Arthur Laffer, who projected that government revenue drops if tax rates get high enough.

Republicans see the same money accumulating and want to deploy it by
not taxing it. Their goal, rather than generating money for expanded
government programs, is to incentivize the private holders of capital
to realize the gains and spur economic growth. The 2017 tax law created opportunity zones, which offer deferral and rate discounts for
reinvesting capital gains in low-income areas. GOP lawmakers are
pushing the Trump administration to consider the idea of indexing
capital gains to inflation, reducing taxes on sales of long-held
appreciated assets.

Still, some conservatives are moving closer to Democratic positions. In
June, the Peterson Foundation, which favors budget-deficit reduction,
invited plans from others, and three conservative groups proposed
limiting or repealing stepped-up basis.

The Manhattan Institute’s Brian Riedl said it was the sort of
concession conservatives would be willing to make “in exchange for tax
reform or a grand deal” to curb entitlement spending.

In campaigns, Congress and academia, Democrats are shaping tax plans
for 2021, when they hope to have narrow majorities. There are three
main options.

President Obama left office with a list of ideas for taxing the rich
that might have raised nearly $1 trillion over a decade. The most
important was taxing capital gains at death.

The idea was too radical for a serious look from Congress at the time.
Now, to a Democratic base that has moved left, it looks almost
moderate.

Former Vice President Joe Biden, the candidate most prominently picking
up where Mr. Obama left off, has proposed repealing stepped-up basis.
Taxing unrealized gains at death could let Congress raise the capital
gains rate to 50% before revenue from it would start to drop, according
to the Tax Policy Center, because investors would no longer delay sales
in hopes of a zero tax bill when they die.

And indeed, Mr. Biden has proposed doubling the income-tax rate to 40%
on capital gains for taxpayers with incomes of $1 million or more.

But for Democrats, repealing stepped-up basis has drawbacks. Much of
the money wouldn’t come in for years, until people died. The Treasury Department estimated a plan Mr. Obama put out in 2016 would generate
$235 billion over a decade, less than 10% of what advisers to Sen.
Warren’s campaign say her tax plan would raise.

That lag raises another risk. Wealthy taxpayers would have incentives
to get Congress to reverse the tax before their heirs face it.

Mr. Obama’s administration never seriously explored a wealth tax or a
tax on accrued but unrealized gains, said Lily Batchelder, who helped
devise his policies.

“If someone’s goal is to raise trillions of dollars from the very
wealthy, then it becomes necessary to think about these more ambitious proposals,” she said.

Instead of attacking favorable treatment of inherited assets, Mr. Wyden
goes after the other main principle of capital-gains taxation—that
gains must be realized before taxes are imposed.

The Oregon senator is designing a “mark-to-market” system. Annual
increases in the value of people’s assets would be taxed as income,
even if the assets aren’t sold. Someone who owned stock that was worth
$400 million on Jan. 1 but $500 million on Dec. 31 would add $100
million to income on his or her tax return.

The tax would diminish the case for a preferential capital-gains rate,
since people couldn’t get any benefit from deferring asset sales. Mr.
Wyden would raise the rate to ordinary-income levels. Presidential
candidate Julián Castro also just endorsed a mark-to-market system.

For the government, money would start flowing in immediately. The tax
would hit every year, not just when an asset-holder died. Mr. Wyden
would apply this regime to just the top 0.3% of taxpayers, said
spokeswoman Ashley Schapitl. Mr. Castro’s tax would apply to the top
0.1%.

There are serious challenges. Revenue could be volatile as markets rise
and fall. Also, the IRS would determine asset increases annually,
requiring baseline values and ways to measure change. That’s easy for
stocks and bonds but far more complicated for private businesses or
artwork.

The rules would have to address how to treat assets that lose instead
of gain value in a year, and how taxpayers would raise cash to pay
taxes on assets they didn’t sell. Under Mr. Castro’s proposal, losses
could be used to offset other taxes or carried forward to future years.

Mr. Wyden would include exemptions for primary residences and 401(k)
plans. For assets that aren’t publicly traded, Mr. Castro would impose
taxes only upon a sale, plus a charge applied to limit the benefits of
tax deferral.

“We’re obviously going to spend a lot of time working this through
because when you’re talking about an issue this important, this
substantial, it’s important to get it right,” Mr. Wyden said.

The most ambitious plan comes from Sen. Warren of Massachusetts, whose
annual wealth tax would fund spending proposals such as universal child
care and student-loan forgiveness.

The ultra-rich would pay whether they make money or not, whether they
sell assets or not and whether their assets are growing or shrinking.

Ms. Warren, who draws cheers at campaign events when she mentions the
tax, would impose a 2% tax each year on individuals’ assets above $50
million and a further 1% on assets above $1 billion. Fellow candidate
Beto O’Rourke has also backed a wealth tax, and it is one of Vermont
Sen. Bernie Sanders’ options for financing Medicare-for-All.

Ms. Warren’s plan appeals to some Democrats because it would raise a
lot of money from a tiny number of people. According to economists
working with her campaign, it would generate $2.75 trillion over a
decade from 75,000 households. That would be roughly a 6% boost in
federal revenue from under 0.1% of households.

For Democrats, the Warren plan has advantages: Money would come only
from the very wealthiest. The IRS could focus enforcement on very few
people. Revenue would come quickly.

“Look at Mark Zuckerberg,” said Gabriel Zucman, an economist at the
University of California, Berkeley, who advised Ms. Warren, speaking of
the Facebook Inc. founder. “Are you going to wait 50 years before you
start taxing him through the estate tax?”

In the real world, a wealth tax would emerge from Congress riddled with
gaps that the tax-planning industry would exploit, said Jason Oh, a law professor at the University of California, Los Angeles. For example, if
private foundations were exempted, the wealthy might shift assets into
them.

“We’ve never seen in the history of taxation a pristine tax of any
form,” Mr. Oh said. “People who want to pursue a wealth tax for the
revenue may be a little disappointed when we see the estimates roll
in.”

European countries tried—and largely abandoned—wealth taxes. They
struggled because rich people could switch countries and because some
assets were exempt. Mr. Zucman said Ms. Warren’s tax would escape the
latter problem by hitting every kind of asset, from artwork to stock to privately held businesses to real estate.

While he and fellow economist Emmanuel Saez assume 15% of the tax owed
would be avoided, former Treasury Secretary Larry Summers and
University of Pennsylvania law professor Natasha Sarin wrote a paper
estimating the plan would raise less than half what Mr. Zucman
projects, based on how much wealth escapes the estate tax.

A paper by economists Matthew Smith of the Treasury Department, Eric
Zwick of the University of Chicago and Owen Zidar of Princeton
University contends top-end wealth is overstated. Acccording to their preliminary estimate, the top 0.1% have 15% of national wealth, instead
of the 20% estimated by Mr. Zucman. Their findings imply that Ms.
Warren’s tax might raise about half of what’s promised.

For an investment yielding a steady 1.5% return, a 2% wealth levy would
be equivalent to an income-tax rate above 100% and cause the asset to
shrink. That leads to the criticism that wealth taxes could push people
to seek higher returns, possibly discouraging productive investment and
adding risk to the financial system.

“You hear 1%, 2%, doesn’t sound that much. Paying 1%, 2% on an asset
you have every single year, that can add up,” said Ben Ritz of the
Progressive Policy Institute, a centrist Democratic-affiliated think
tank. “You’re basically having the asset shed money over time.”

To audit 30% of wealthy taxpayers, as Mr. Zucman recommends, would
involve tens of thousands of complex investigations, a challenge even
if the IRS were beefed up as Ms. Warren proposes. The agency already
struggles with similar calculations for estate taxes, engaging in long
battles over valuing such things as fractional shares of family
businesses. Under the wealth tax, those once-per-lifetime audits would
become annual affairs.

The wealth tax also has an extra asterisk: it would be challenged as unconstitutional.

The Constitution says any direct tax must be structured so each state contributes a share of it equal to the state’s share of the population.
A state such as Connecticut has far more multimillionaires per capita
than many others, so its share of the wealth tax would far exceed its
share of the U.S. population. How Ms. Warren’s wealth tax might be
categorized or affected is an unsettled area of law relying on
century-old Supreme Court precedents.

Still, the wealth tax polls well, and Democratic candidates are eager
to draw a contrast with President Trump, a tax-cutting billionaire.

Republicans will push back. Rep. Tom Reed (R., N.Y.) says tax increases
aimed at the top would reach the middle class. “It easily goes down the slippery slope,” he said. “If it’s the 1%, it’s the top 20%.” he said.


--
Watching Democrats come up with schemes to "catch Trump" is like
watching Wile E. Coyote trying to catch Road Runner.

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)