Senator Warren’s Wealth Tax Plan would be hazardous to the US economy

During the last presidential debate Senator Elizabeth Warren talked about her plan to punish those who are the most success in this country.  Of course she did not use the word punish, preferring to use one of the usual progressive platitudes.  I’m sure you can guess which one in a microsecond.  Warren is not the only democratic presidential candidate pushing a wealth confiscation scheme, at least two others are.

This type of wealth confiscation has been tried in several states and a great many countries with the same disastrous results.  The Mises Institute article The Problem with Elizabeth Warren’s Wealth-Tax Plan discusses Senator Warren’s plan in great detail.   

The central argument of Warren’s the wealth-tax proposal is this: through a progressive wealth tax system — which means those with more wealth will pay higher tax rates — the wealthiest people in America will pay their “fair share” and that fair share will enable the equal redistribution of wealth.

As you can see from the first component of her proposal, this is not just a tax increases of 2 percent on income, this is a tax on assets and wealth.  Components two and three prove that this is just the beginning,

First, households would pay an annual 2 percent tax on all assets for net worth equal or less than $50 million. Individuals and families who are worth more than a $1 billion would pay a 3 percent tax . Second, the Warren forecasts a revenue of $2.75 trillion, and that would be allocated in the creation of new government programs such as universal child care for every child age zero to five; universal pre-k for every three- and four-year-old; student-loan forgiveness; free tuition and fees for all public technical schools, two-year colleges and four-year colleges. Third, the Warren proposal aims to heavily tax corporations so that they would pay their so-called “fair share.”

The proposed 2 percent tax on the wealthy will only fund a tiny fraction of those new programs and there is no mention of the flagship progressive pipe dream, Medicare for All.  A massive amount of federal bureaucracy and regulation will be needed to ensure corporations pay their fair share.  This is discussed in the next quote.

The first consequence will be the significant expansion of federal authority over the economy. Even if, in theory, the Warren wealth-tax plan targets only the super wealthy at first, this does not mean that the middle-class is exempted from a potential rise in income tax. For Elizabeth Warren to fund all the programs that she wants to implement, taxing the billionaires — even at a very high level — won’t be enough. The middle-class will eventually be forced to contribute to the funding of these programs, which means that the plan, instead of alleviating the wealth gap, will reduce the purchasing power of the middle-class. This means that ordinary citizens will have a hard time saving for their retirement or to invest in business ventures. Moreover, the plan gives the federal government more extensive power and authority over the allocation of resources and the economy as a whole.

How bad will results of the plan be?  Check out the next quote.

As a result, federal agencies will have far greater control over how resources will be allocated and invested throughout the broader economy. Yet, experience suggests government allocates resources inadequately and inefficiently, while distorting markets, and leading to bubbles and malinvestments.

The second consequence will be a great decrease in productivity for the economy overall. Indeed, those who already own large amounts of assets often own those assets because they have managed to put them to good use expanding the economy and increasing employment.  The wealth tax, meanwhile, is built on the premise that government agents can convert that wealth into cash payments, and that the government knows better how to distribute it. 

Mass exoduses of those who produce always occur when these wealth redistribution schemes are  implemented which result in a large scale decrease in wealth and standard of living.  This will happen here because:

The Warren wealth tax plan may confiscate the material wealth of wealthy persons and families. But those same people can take their know-how and move elsewhere. The impact on American productivity would not be positive.

At first the negative consequences of Senator Warren’s plan may only affect the wealthy.  This won’t last long.  Very quickly the negative effects will spread down to the middle class.  This conclusion was reached by the author of the Mises article.

Senator Warren’s wealth tax plan, despite the well-intended programs that it will generate; will end up as merely a tool to increase the power of Washington policymakers. Over time, taxes will creep down the income scale as the income tax did, eventually hiking the tax burden for the middle class, while also cutting productivity which will drive down wages and wealth for everyone.

Very rapidly the negative consequences of the Warren wealth confiscation plan will ripple through the economy, eventually turning into a tidal wave of destruction.  This has happened wherever this type of plan has been implemented.

The Fishbait Miller Significance to Elijah Cummings Death at this Time

Elijah Cummings death is causing a little slowdown in the schedule for impeachment but not for the reason you might think.

Yeah they’re going to go though the whole honoring him routine which is normal for a powerful congressman who served as long as he did, but if you really want to understand what this is taking as long as it is you have to remember the story I told you about Fishbait Miller the former doorman of the house as related in the autobiography of Tip O’Neil: Man of the House (a great book btw) and how it played during Obamacare

Tip told the story of a congressman who had promised legendary speaker of the house Sam Rayburn a vote because of a favor to a key constituent, but was getting killed at home over the highly unpopular issue. Once tip established that the man had given Rayburn his word he said his only option was to ask Rayburn’s permission to vote against it.

“…you gave me your word and I expect you to keep it. However I can certainly appreciate your situation, so here’s what I’ll do for you. On the day of the vote I want to see you in the front row. Keep your eye on the doorkeeper. If I don’t need your vote, Fishbait Miller will give you the sign and you’ll be free to vote your district.”…
…when Leo took his seat in the front row, he looked around and saw thirteen other guys that Sam had in his pocket in case he needed them. It wasn’t just Leo. The entire front row was sitting there and waiting for the nod from Fishbait Miller.”
This is the real question that we don’t know the answer to. Does Nancy Pelosi have the votes and is just deciding who sits in the front row or is she scrambling for votes? And if the media knows what the truth is will they tell us?

It turned out that for Obamacare thanks to the phony Stupak ammendment Nancy did have the votes.

Nancy Pelosi knows that Impeachment is the kiss of death for all those so called “moderates” in Trump districts who still think it’s worth pretending back to the voters at home that they are not the gun grabbing, church hating radicals who think Abortion and gay marriage are sacraments. So just as she did with Obamacare if she decides to take the plunge the idea is to get just enough votes to get impeachment over the finish line and allow every Democrat she can to vote “No”.

Elijah Cummings death means that there is one less vote for impeachment which means that there is one less Democrat that she has to force to jump off that impeachment bridge, incidentally why she is so anxious for GOP votes, it’s not just about the phony appearance of “bipartisanship” every single one she can nail is one Democrat in a swing state that doesn’t have to jump.

You can bet real money that there are a bunch of freshman democrats who want that safe Democrat seat filled ASAP. Their re-election hopes are tied to it.

Of course as you might remember that didn’t save Democrats the last time and I suspect won’t do so again.