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1 Huaqun Li & Karl Smith, Analysis of Sen. Warren and Sen. Sanders' Wealth Tax Plans 1 (2020)

handle is hein.taxfoundation/alywrsnd0001 and id is 1 raw text is: Analysis of Sen. Warren and Sen. Sanders' Wealth Tax Plans FISCAL FACT No. 691 Jan. 2020 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. @2020 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Huaqun Li Senior Economist Karl Smith Vice President for Federal Tax and Economic Policy Key Findings * Wealth taxes on ultra-wealthy households have been proposed by Democratic presidential candidates to fight against inequality and raise extra revenue but there is substantial uncertainty about how much revenue can be raised. * Comparing wealth taxes to income taxes shows how seemingly low rates on wealth equate to high income tax rates. * Wealth taxes in European countries have had disappointing results and many have been phased out. * A wealth tax would face serious administrative and compliance challenges due to valuation difficulties and tax evasion and avoidance issues. * Using the Tax Foundation's wealth tax model, and after factoring in the macroeconomic feedback effects, we estimate that Sen. Elizabeth Warren's proposal would raise about $2.2 trillion and Sen. Bernie Sanders' plan would raise $2.6 trillion over the 10-year period from 2020-2029. * Warren's wealth tax would reduce long-run GDP by 0.37 percent, while Sanders' plan would decrease it by 0.43 percent. Given that the model assumes an almost completely open economy with highly efficient international capital markets, the wealth tax also could have dramatic short- run effects-including a more than doubling of the trade deficit.

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