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The impact of Warren’s Ultra-Millionaire tax bill

David Lesperance examines likely consequences of U.S. Sen. Elizabeth Warren’s latest attack on American wealth.

After weeks of tough talk Senator Elizabeth Warren has now thrown down the gauntlet. The Ultra-Millionaires tax bill has been announced. Its highlights include:

  • A 2% annual tax on worldwide assets of all types between US$50M and US$1B and
  • A 3% tax over US$1B.

In some circles the idea of a Wealth Tax is being soft pedalled. There are suggestions that it should be “one-time” or “one- off” and not recurring. No doubt this is to soften the philosophical rough edges of Senator Warren’s proposal.

Unfortunately for Wealth Tax advocates of all types, the targets of these proposals are simply not buying their argument. This is because they know their history… where numerous one-time or temporary taxes became permanent. They have seen, time and again, that when the originating crisis could not instantly be solved… or when other issues came to the forefront… there was the inevitable need for the on-going revenues that these “temporary” taxes reliably generated.

There has been a huge response to the announcement of the Ultra-Millionaire Tax Bill. …

… More fundamentally, the loudest opponents question the constitutionality of a federal Wealth Tax. Warren has attempted to pre-empt this objection. She cited several legal scholars who claim that such a tax is in fact constitutional. These academic opinions might give supportive politicians the political cover to implement a Wealth Tax, even if there is a possibility that it might be overturned at some point in the distant future.

However, there is a risk in wealthy Americans relying on such a future legal decision. This was succinctly stated by an UHNW American client. In response to one advisor’s statement that the Ultra-Millionaire’s tax was unconstitutional, this clear-eyed client responded,

“And how many years of wealth tax and legal fees will I pay before the US Supreme Court agrees with you?”

Lesperance recently discussed his concerns about Warren’s plans with CarolinaJournal.com.

Mitch Kokai / Senior Political Analyst

Mitch Kokai is senior political analyst for the John Locke Foundation. He joined JLF in December 2005 as director of communications. That followed more than four years as chie...