Bernie Sanders' Wealth Tax Is Wonkier Than Elizabeth Warren's

[Uncle Joe]

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It looks … a little complicated, right? I mean, that’s a lot of tiers. But when you average all those different marginal rates together, Saez and Zucman conclude that America’s billionaires would initially be paying about a 6 percent average tax rate on all of their wealth.

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First, it falls right near the sweet spot when it comes to raising cash. In separate work, Saez and Zucman have shown that the wealth tax rate on billionaires at 6.25 percent maximizes revenue for the government. Go higher, and it will raise less cash for the government over time by crimping the fortunes of the rich. Things become more complicated when you consider how the wealth tax interacts with other taxes, but the bottom line is that Sanders has structured his version to look pretty ideal on a budget estimate. “The Sanders plan is essentially maximizing long-term revenue collection on billionaires,” Zucman confirmed for me in an email.

Second, a 6 percent average tax rate could stop wealth inequality from getting much worse, at least by some measures. In recent years, Saez and Zucman note, the richest U.S. households have seen their wealth grow at a rate about 4 percentage points faster annually than the average family’s. Warren’s plan would erase part of that gap. Sanders’, they say, would erase it “entirely.”

So Sanders has shown us what a revenue-maximizing wealth tax that puts a halt to rising inequality would roughly look like on paper. That also makes it easier to imagine what the downsides of such a policy might be. (I expect a lot of venture capital investors and tech types would start talking about moving to Canada.) Warren’s version might be an easier sell, but compared with Sanders’, the structure of her tax seems a bit arbitrary. If your definition of wonkiness involves making policy decisions to accomplish specific goals in the most efficient manner possible, it seems pretty clear who the wonk is this time.

https://slate.com/business/2019/09/wealth-tax-bernie-sanders-elizabeth-warren-billionaires.html