Warren proposes to tax the wealth of people over $50 Million at 2%, increasing that to 3% for wealth over $1 Billion. There's a very important word in there: wealth. This isn't an income tax for people who get paid over $50 M/year or $1B, this is a tax on whatever they own. Say they own a nice house, a couple of cars, some nice jewelry or a boat or RV or all of the above. The value of their properties will assessed and they'll be taxed. We're not necessarily talking about just money in a bank or investment vehicle, or a mansions, we're talking about anything that a deeply envious legislature would consider material wealth: which would be everything.
Thinking farther down this road, those assets were bought with money that has already been taxed. The items themselves probably were subject to sales taxes as well as an array of other taxes, state and federal. They've probably been taxed more than one time. She proposes to tax them forever. 2% this year, 2% next year, 2% the year after that and so on, in perpetuity.
Warren's plan has been written by ... (wait for it) ... a couple of economics professors from the University of California at Berkeley. (Who else but professors? From where else but the People's Republic of Berkeley?) They have said the wealth penalty will raise $2.75 Trillion over its first 10 years. You probably know I hate guesses like that. Are they assuming linear distribution at $275 Billion/year, or some growth in revenue so little collected now and more collected every year to year 10? Could they be considering a decrease in collections over the decade so less is collected over the years, which seems likely to me since the wealth will be bled off by this tax - which is the purpose of the tax, after all. Personally, I don't believe any of it. Predictions about revenues from tax increases are virtually always wrong.
The first problem is that this unconstitutional. Unless it says so in the constitution, they can't just tax whatever they want. We have private property in this country. The founders considered and rejected the idea of an income tax; you'll recall it took constitutional amendment (the 16th in 1913) to get an income tax allowed. This is like an ex post facto income tax. A tax on income you earned and have been taxed on several times already. Certainly changing the laws about taxing property one owns after they acquired things is an ex post facto law.
As I talked about in my piece on The Dems Childish View of Wealth yesterday, it will also affect the market values of everything that's considered an asset. If a billionaire fund manager like Warren Buffet has to sell off part of his Berkshire Hathaway holdings to pay his taxes, that could substantially lower the cost of the shares, hurting everyone who holds shares. It could cause or exacerbate a market correction, affecting everyone who's not a millionaire or billionaire but simply trying to save money and get some earnings on it, unlike having it in a bank.
You know that one of the hallmarks of new taxes is that those getting taxed adjust their lives to pay less tax. Which is why you also know that incomes from taxes never quite agree with predictions (particularly from the Congressional Budget Office - who has said nothing about this one). If a billionaire can reduce his tax burden by transferring assets to their favorite charity, look for lots of that to happen. It's hard to imagine people preferring to pay tax than to pay money to their favorite charities. At least, I've never met anyone who'd rather pay taxes.
Look for a lot of confusion and hassle about valuations of these estates. That's a glaring hole in the narrative. If you think that everyone will agree on valuations, you've never been to an auction - or watched an episode of PBS' Antiques Roadshow. Expect large numbers of lawsuits over this. It seems to me, and I've never seen this detail, that if one is being taxed on the value of their property that the value shouldn't be expected to remain the same and could go up or down. Annual appraisals for things that aren't publicly traded, like their houses, cars, and so on?
This is a really bad idea, poorly studied, virtually certainly unconstitutional. As always, it will hurt people other than the rich that Warren wants to hurt. Its only selling point is it appeals to the deeply envious primary voters she's selling it to.