Some Americans Could See Tax Rates Over 100% Under Warren Plan - Analysts

That's the headline of an article in the Blaze email today; it links to an article of nearly the same name in Wall Street Journal. As usual, the WSJ is a paywall that won't let you read if you're not already a subscriber.   

They say that Warren is calling for raising the top marginal rate on income taxes to 39.6 percent, a 14.8 percent tax on Social Security, and an annual tax of six percent on accumulated wealth.  That's up from the 2% wealth tax I took a look at two weeks ago.  Quoting from the WSJ:

Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren's taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.

The rate would vary according to the investor's circumstances, any state taxes, the profitability of his investments and as-yet-unspecified policy details, but tax rates of over 100% on investment income would be typical, especially for billionaires.

It's hard to sum up all the economic damage Warren wants to do to America, but for an avowed socialist like her, it's probably a feature not a bug that this would probably collapse the US.  Her 6% wealth tax would very probably crash world stock markets, retirement plans and other savings vehicles.  That's not all.  She wants to outlaw private health insurance, kill off the health insurance industry and make every aspect of it government-run. That industry alone is about $1 Trillion/year in revenue and 621,000 people's careers.  She has said that some of those people in the health insurance would go into other areas of insurance, but that simply begs the question of whether (1) there are job openings for them and (2) the fields have enough in common that they could make the change.  By analogy, when she says that health insurance workers can move to auto insurance, is that like telling a cardiologist, “you work on internal organs, why don't you fill in doing colonoscopies?”

The wealth tax is going to unsettle all the stock and bond markets in the world, as investors do their best to limit losses.  Do you remember the big hubbub in the news starting around last March when the bond yield inverted and that started fear we were going into recession?  The reason the yield inverted (short term bonds paid higher interest than long term bonds) was that there was very high demand for long term US bonds from overseas.  The high demand meant we didn't have to pay as much interest to get them to lend us their money.  The reason the demand from overseas was high was that we aren't at negative interest rates like so much of the world.  Getting a low guaranteed yield from a US bond looked better than a guaranteed loss from a German or other country's bond at negative interest rates! 

When the US desperately needs to sell bonds to raise money for her giveaway schemes, we'll need more buyers for our bonds, so we'll need to pay higher yields to attract buyers and even then might not get enough.  How many places can buy the estimated $3.4 trillion we'll need to borrow for Medicare for All - every year?

Expect to see massive capital flight out of the US, collapsing our stock markets.  This will ripple around the world and destroy retirement accounts for everyone that has one.  Liz is so naive she probably thinks she's just taking a few gold coins out of Scrooge McDuck's swimming pool, or Smaug's castle. 

I don't think she has a prayer of getting the revenues she thinks she will.  There hasn't been a repeal of Hauser's law that I know of - Political Calculations blog says it has held up remarkably well.  Even Democratic stalwart economists are warning about this.  Back to the Blaze article:

Another critic of Warren's wealth tax is former economist Larry Summers, who worked in the Obama and Clinton administrations. "We do need to study pretty carefully why it is that most of the European countries, who usually are more progressive than we are and had wealth taxes, have decided over the last 15 or 20 years to eliminate those wealth taxes and why almost none of them get anything like the kinds of revenue that Sen. Warren is aspiring to get," he told CNBC in January.