My mother used to tell me not to “cut off my nose to spite my face”. As the envy of prominent Democrats of the super wealthy has moved to hate, it is obvious they should have known my mother. Given that taxes were due on Monday, we need to look at four Democratic tax proposals that would tax the wealthy and simultaneously destroy the economy for everyone else.
Democratic Senator Warren is advocating a 3% wealth tax on the super wealthy. Modest problems: Individuals would need to sell assets to pay Senator Warren’s wealth tax. Individuals would need to pay income taxes on the assets sold before having the money to pay the wealth tax. Someone like Amazon’s Jeff Bezos (pre-divorce net worth of $150 billion) would be faced with a first year wealth tax of $4.5 billion.
In two steps, the taxpayer would fund Senator Warren’s wealth tax. First would be the sale of assets accompanied by the income tax on the sale of the assets and next, what was left would be used to pay the wealth tax.
To raise the $4.5 billion to pay Senator Warren’s wealth tax, Mr. Bezos would be required to annually sell about 7% of his Amazon stock. For others, to raise the necessary funds if the stock value was in stock options, these taxpayers would need to sell about 9% of their Amazon stock. These would be annual additional taxes for the super wealthy.
The proposed wealth tax would ultimately tank the stock markets thereby tanking every pension fund in the country. With the annual liquidation required to pay these taxes, the great individual wealth of the super wealthy would disappear and income tax rates for everyone else would need to explode after the wealthy had been taxed to death. This would occur before Ocasio-Cortez’s end of the world moment.
And let’s not forget that the Securities and Exchange Commission and the investment community preclude and/or discourage executives from selling stock so that the goals of the executives and the shareholders will be in lock step. And of course, outside of readily traded securities, determining fair market value of the assets of wealthy Americans every year would be a nightmare. What is that Picasso actually worth if we need to sell it tomorrow when everyone else is liquidating their art c