Have you heard about Sen. Bernie Sanders’ tax policy? Dubbed the “wealth tax,” his new proposal seeks to level out America’s finances, bringing the 1% and poverty line-straddlers closer together.
It’s been blasted by Republicans over the last few weeks, as well as free market-leaning economists. To them, the Sanders tax plan puts a severe limit on growth – both for individuals and corporations.
And according to research recently published by two University of California economists, the wealth tax would’ve had a massive effect on some of the world’s richest men if it had been activated in the early 1980s.
Based on the report’s findings (which were published on the report’s website), Jeff Bezos’ $160 billion fortune would now only be worth $52.2 billion under Sanders’ proposed changes. Warren Buffet would’ve taken a $77 billion hit in a drop from $88.3 billion to $11.1 billion.
Bill Gates saw an $83.5 billion loss of net value, going from $97 billion to $13.5 billion. Mark Zuckerberg, despite making his money way later than the rest of the field, would get whacked with a $28.6 billion drawdown. His net worth would sink from $61 billion to $32.4 billion.
All that money – $296.9 billion in total – would’ve gone straight to the government instead, to eventually be distributed among numerous programs.
“I don’t think that billionaires should exist,” said Sanders earlier this year.
“This proposal does not eliminate billionaires, but it eliminates a lot of the wealth that billionaires have, and I think that’s exactly what we should be doing.”
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If lawmakers see fit to approve Sanders’ proposed tax changes, it would take approximately 15 years to halve the wealth of current billionaires.
Presidential hopeful Sen. Elizabeth Warren has a wealth tax of her own, albeit a somewhat more modest one. It’s very similar to the Sanders plan, but is far less aggressive in reducing billionaire net worths. Bezos would only lose $65 billion; Zuckerberg, $14.5 billion.
Still, though, both plans look to skewer the ultra-rich. Warren claims that her version of the tax would raise $2.6 trillion over the next ten years.
That sure sounds like an excellent way to reduce the U.S.’s debt, doesn’t it? $2.6 trillion is a ton of cash, after all.
That’ll fix things for sure, right?
Well, sad to say, despite Warren and Sanders’ best efforts, their tax proposals probably won’t “cut the mustard” long-term.
Back in February of this year, the national debt hit a square $22 trillion. For those of you keeping score at home, $2.6 trillion from the Warren plan would (if applied entirely to the national debt) only reduce it by 13.4% over the next decade. In fact, it would likely take well over 50 years (or more) to raise that $22 trillion, assuming that billionaires continue to grow their fortunes under the influence of an oppressive tax.
But wait, it gets even worse.
Based on projections made by economists in February, the U.S. is set to add another $12 trillion in debt by 2029.
So, even with a $2.6 trillion reduction from Warren’s wealth tax, America’s national debt would still rise by $9.4 trillion.
All while the U.S.’s billionaires – the men and women who grease the wheels of the economy – are slapped with massive penalties for simply being too rich.
But hey, at least the “one-percenters” will be statistically closer to the middle class. Now THAT’S something worth fighting for, isn’t it?
In the end, though, income inequality might not look like such a critical issue. Not because aggressive tax plans tightened the playing field, though, but because the U.S. will have much bigger fish to fry with a recession-stricken Warren or Sanders presidency.
Is that the future Americans want? Based on recent polls, not really. Wall Street certainly doesn’t, and if the Democrats start to gain steam, bulls could easily get burned in the pre-election institutional selling.
Which, ironically, could kickstart the recession that Warren and Sanders claim their tax plans will help avoid.