Democratic presidential candidate Elizabeth Warren is among those leading contenders getting noticed for policy ideas that are gaining traction. One is her proposal to tax extreme wealth.
New York Times columnist Paul Krugman reports that the Warren plan would impose a 2 percent annual tax on an individual household’s net worth in excess of $50 million as well as an additional 1 percent tax on wealth in excess of $1 billion. The tax would affect a very small group of wealthy folks — about 75,000 households — but it would raise around $2.75 trillion over a decade.
Krugman admits it’s a “pretty radical plan.” It raises the average tax rate on the top 0.1 percent to 48 percent from 36 percent, and would bring the average tax rate on the top 0.01 percent up to 57 percent. “Those are high numbers,” Krugman writes, adding that they’re “roughly comparable to average tax rates in the 1950s.”
But wouldn’t the rich just find ways around those taxes, Krugman asks? Perhaps not much: “Think about it,” he says. “How much would entrepreneurs be deterred by the prospect that, if their big ideas pan out, they’d have to pay additional taxes on their second $50 million?” It’s true, he continues, “that the Warren plan would limit the ability of the already incredibly wealthy to make their fortunes even bigger and pass them on to their heirs. But slowing or reversing our drift toward a society ruled by oligarchic dynasties is a feature, not a bug.”
Conservative critics, predictably, have branded such thinking as socialistic or worse, but Krugman likens it more to the thinking of Republican presidents Teddy Roosevelt or Dwight Eisenhower. Krugman notes that there was a period in America’s history during the turn of the 20th Century when political leaders “were proud to proclaim their willingness to tax the wealthy, not just to raise revenue, but to limit excessive concentration of economic power.” President Roosevelt, for example, proclaimed in 1906 that it was “important to grapple with the problems connected with the amassing of enormous fortunes (some) swollen beyond all healthy limits.”
Warren’s plan comes at a time when the net worth of the wealthiest 0.1 percent of Americans is almost equal to that of the bottom 90 percent combined — and that wealth gap continues to grow at an alarming rate. It is, in short, an idea that tackles a critical issue of our times.