Elizabeth Warren

Elizabeth Warren's Budget Math Still Doesn't Work

The Massachusetts senator is promising to pay for programs with a wealth tax, but simple math says otherwise.

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On the campaign trail, Sen. Elizabeth Warren (D–Mass.) is promising voters that she "has a plan for that"—no matter what "that" is.

But her plans don't add up.

Take Warren's appearance last week on The View, where she overestimated the number of programs she could fund with her proposed wealth tax of 2 percent on personal net worth over $50 million dollars and 3 percent on net worth over $1 billion. Warren name-checked her student loan forgiveness and tuition-free college plan, her childcare plan, and a proposal to increase teacher pay as programs she'd fund with the wealth tax.  

According to University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, Warren's wealth tax would raise $2.75 trillion dollars over the next decade.

Warren's student loan forgiveness and tuition-free college plan would forgive up to $50,000 in student debt owed by households who earn less than $100,000 in income while offering smaller student debt forgiveness to households earning between $100,000 and $250,000. The plan also would make every public two-year and four-year college in the country tuition-free, increase Pell Grant funding by $100 billion, and create a fund to support historically black colleges and universities (HBCUs). Combined, this plan would cost $1.25 trillion over the next decade.

Warren's child-care plan has several planks: providing universal pre-K, funding childcare for all, and raising childcare worker wages. Specifically, the plan would have the federal government work with state and local governments to create a network of free child care centers, preschool, and in-home care options, while raising child care worker wages to those of comparable public school teachers. This combination of proposals will cost roughly $1.7 trillion over the next decade, according to an analysis from Moody's.

Warren also mentioned a plan to raise teacher pay on top of these other proposals. The Massachusetts senator hasn't released a policy on raising teacher pay specifically, so let's instead look at plans from fellow Democratic candidates Julian Castro and Sen. Kamala Harris (D–Calif.). Harris's plan to raise average annual teacher pay by $13,500 would cost $315 billion over the next 10 years, according to the Harris campaign. I reached out to the Warren campaign to see if they had a cost estimate for their teacher pay plan, but the campaign has yet to respond. I will update this post if the campaign gets back to me, and in the meantime, I used $315 billion as an approximation.

Taken altogether, Warren's proposals would cost $3.265 trillion* over the next decade, compared to the $2.75 trillion raised by the wealth tax. That means a wealth tax isn't enough to fund these programs. But that's a common theme among Democratic policy proposals released thus far. Sen. Bernie Sanders (I–Vt.) offered $15 trillion in tax increases to fund Medicare for All, which is estimated to cost $32 trillion. And it's not just Democrats: Republicans passed a roughly $1.5 trillion dollar tax cut without any compensating spending cuts.

What's more, economists have questioned whether $2.75 trillion is an accurate estimate of wealth tax revenue. Former Clinton administration Treasury Secretary Larry Summers called into question Saez and Zucman's estimate, arguing that they dramatically underestimate the enforcement problems with a wealth tax, and said the tax might raise only 40 percent of that projection. The University of Chicago Booth School of Business polled economic experts and found that 73 percent either agreed or strongly agreed that the wealth tax would pose significantly more enforcement challenges than existing taxes due to difficulties of measuring net worth.

European countries have moved away from wealth taxes—12 countries had wealth taxes in 1990, while only four did by 2017. Before those taxes were abolished, they played a minimal role in revenue generation. These countries recognized that the wealth tax poses real economic problems. They treat personal wealth, like a mansion, the same as productive business investments like factories or tools, which impedes both enforcement and economic growth. 

The bottom line is that Warren can't pay for all the things she's promising.

*CORRECTION: This post originally stated that Warren's proposals would cost $3.265 billion over the next decade. They will cost $3.265 trillion.

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  1. “Taken altogether, Warren’s proposals would cost $3.265 billion over the next decade…”

    Trillion, perhaps?

    1. Billion, trillion, whatever. It’s a Reason intern. They got the requisite “to be sure” GOP bashing in, so everything’s good.

  2. ‘To be sure’ the author is using old school straight math, and not common core math to make her point. If we use common core math, the process is “the intention is good, so the money must be there somewhere, so it will work out”.
    With that common core math, any small tax increase, as long as it is only on the rich, can pay for an infinite number of programs.

  3. Don’t fake-progressives who support morons like Warren say ‘maths’?

    As in simple quick maths?

    Other than that, the left are hard core financial illiterates.

    1. They are not fake-progressives but they are non-Americans – mainly Brits – trying to (gasp!) influence our elections and politics through social media.

      ‘Maths’ is a common Britishism. It is essentially unknown in American English.

      1. Yes, and I’ve noticed it being used more and more.

        Remember King George! Down with Britishism! First maths, next spoon bans!

        1. Maybe a new Stamp Tax would cure everything.

    2. Socialists like Warren belong in prison or in a landfill. Slavers have no right to be slavers.

  4. So Elizabeth Warren’s Budget Math Still Doesn’t Work. Is that strange? NO! Every program cost that has been proposed by a politician has always cost more than was stated that it would. That started with Medicare when it was passed that I can remember. The same with the budget deficit because of a new program or a tax cut. Just look at the Great Society and its cost under J Johnston. More money was spent on it and the results was much less than it was claimed it would be. The same with the War on Poverty. It cost more than was proposed and had a much smaller benefit than thought. In fact there were more in poverty after the War on Poverty than there was before.
    On tax cuts they create a much greater deficit because spending is never cut at the same time. Not only is it not cut it is expanded. That applies also to the last tax cut that we had. Instead of cutting the budget to match the income spending was increased. Once a spending bill is passed it IS NEVER CUT which is the problem.

  5. Elizabeth who?

  6. Everybody who thought her budget would ever add up raise your hand, so we can ship you off to the looney bin from which you escaped.

  7. A “wealth” tax will only work if someone or some agency assesses the value of a person’s taxable wealth at the point it is being taxed.

    Which is impossible. The only “wealth” tax that works is the property tax, which has its value determined by the government assessment office based on the sale of similar homes within that market.

    1. Not really. A wealth tax works whenever it is in the interest of the wealthy to declare their wealth. And at core the wealthy depend far more on the state to protect their wealth than regular folks depend on the state to protect their income.

      Warren’s proposal is, politically though, the worst of all possible worlds. The rate is too high to really represent something to the wealthy other than merely punitive. It is combined with absolutely no reform to simplify/deburden the income tax to appeal to the middle/uppermid classes. And it is arrogant towards the young in assuming that all they are interested in is free stuff delivered by bureaucrats.

      Politically, I can’t see what votes she’s really trying to get – federal bureaucrats? academics who want to be appointed to be czar? If she were actually interested in tax reform, she would have combined a wealth tax with reduction in and simplification of marginal rates for income. But that would generate the same revenue as now or less – so getting votes would depend entirely on the plans acceptance to those who currently pay federal taxes.

      The only thing I can see is that she’s a decrepit old policy wonk who can’t understand why a different decrepit old policy wonk is (or was in 2016) popular among younger voters so thinks a policy wonk solution is the solution.

      She missed her window. Some younger candidate is gonna capture the intergenerational zeitgeist in the Dems this year. And some other candidate is gonna capture the primary votes in flyover country and Rust Belt. Those are the only two demographics that matter for Dems in 2020.

  8. A “wealth” tax will only work if someone or some agency assesses the value of a person’s taxable wealth at the point it is being taxed.

    Which is impossible. The only “wealth” tax that works is the property tax, which has its value determined by the government assessment office based on the sale of similar homes within that market.

  9. A “wealth” tax will only work if someone or some agency assesses the value of a person’s taxable wealth at the point it is being taxed.

    Which is impossible. The only “wealth” tax that works is the property tax, which has its value determined by the government assessment office based on the sale of similar homes within that market.

    1. Real estate? Sorry, to variable. There is a precision to the stock market.
      The wealth tax will be based on the highest value of your 401k stocks during the prior rolling two year period. The tax will be due quarterly, and deducted from the last paycheck of the quarter. If you do not make enough to pay the tax from the last check of the quarter, all pay will be taken until the wealth tax is paid.
      Everyone with stocks who is not employed will have to pay the tax by direct withdrawals from the fund(s). The stock firms will be allowed to charge the usual fees for these forced withdrawals, and you will also owe the income tax on the withdrawals to pay the wealth tax.

  10. Republicans can spend trillions of magical nonexistent money on absolutely useless shit, so why can’t she spend it on stuff that helps people?

    1. Absolutely useless shit describes every word that comes out of your mouth, you fucking retarded hick.

    2. Who is defending Republicans here?

    3. You call hiring thousands to build carriers, bombers, and submarines “useless shit”? Think about all those gainfully employed. Also, think about taxing them, as well as those who are making millions on the rising MI stocks. More government revenue, clearly, as opposed to dumping dollars paying for junkies’ needles and birthing illegal babies. Now go break some windows.

      1. So it’s OK for make-work government spending as long as we’re not breaking windows but foreign countries? Is the problem of fixing broken windows that the scale is too small for you limited-government folks?

        1. Defense spending isn’t even close to being the most expensive item on the federal docket, so what are you complaining about?

          FHIP taxes last FY brought in about $250 billion, as opposed to $1.4 trillion for spending on Medicare and Medicaid services combined. Just taking that spending back to FY08 levels would give us the lowest deficit in about 18 years.

    4. Tony, show me in the constitution the enumerated power that requires the federal government ‘help people’.

      1. Show me where it says it should only help rich people, you wild-haired sociopath.

        1. My god you are such a fucking idiot.

    5. How does spending it on “stuff that helps people” make the nonexistent money magically exist?

  11. On the campaign trail, Sen. Elizabeth Warren (D–Mass.) is promising voters that she “has a plan for that”—no matter what “that” is.

    But her plans don’t add up.
    ———

    Her plans do add up if you use Woke Math.
    Woke Math says the rich will pay for it and it will add up and if it doesn’t just tax them more. So there.

  12. Just go home and feed your hordes of cats lady!

  13. A retarded prog can’t do math… Well I never!

  14. Warren and her progressive ilk have always had problems with rudimentary math.
    On the other hand, they also have problems with logic, common sense and reality.

  15. Perhaps she’ll pay for it by taxing all those Native-American oil-millionaires in OK?

  16. […] He plans to spend much, much more, as does Elizabeth Warren, who is running on promises to spend $3.3 trillion over a decade in new giveaways that will be paid for by an unworkable, probably unconstitutional “wealth […]

  17. […] He plans to spend much, much more, as does Elizabeth Warren, who is running on promises to spend $3.3 trillion over a decade in new giveaways that will be paid for by an unworkable, probably unconstitutional “wealth […]

  18. […] He plans to spend much, much more, as does Elizabeth Warren, who is running on promises to spend $3.3 trillion over a decade in new giveaways that will be paid for by an unworkable, probably unconstitutional “wealth tax” […]

  19. […] He plans to spend much, much more, as does Elizabeth Warren, who is running on promises to spend $3.3 trillion over a decade in new giveaways that will be paid for by an unworkable, probably unconstitutional “wealth […]

  20. […] “Elizabeth Warren’s Budget Math Still Doesn’t Work,” by Alex Muresianu […]

  21. […] growth. So, who will be the one to point out that Warren’s fusillade of spending proposals can’t possibly begin to add […]

  22. […] growth. So, who will be the one to point out that Warren’s fusillade of spending proposals can’t possibly begin to add […]

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