Bernie Sanders

Bernie Sanders Thinks Every Billionaire Is a Policy Failure

Sanders has proposed a wealth tax to eliminate billionaires and fund his expensive domestic policy agenda.

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On Tuesday, Sen. Bernie Sanders (I–Vt.) rolled out his plan for a wealth tax on families whose net worth exceeds $32 million. The purpose of the tax is two-fold: raise revenue for the senator's high-spending domestic agenda, and eliminate supposedly unjust concentrations of private wealth.

That would include anyone worth more than $1 billion, according to Sanders, who tweeted out The New York Times coverage of his proposal with the caption "billionaires should not exist."

Sanders' wealth tax ranges from a 1 percent yearly tax on net wealth above $32 million held by a married couple ($16 million for a single person) to an 8 percent tax on a married couple's wealth that exceeds $10 billion ($5 billion for a single person).

This would supposedly raise $4.5 trillion over 10 years, which would then be spent on Sanders' $2.5 trillion housing proposal, universal childcare, and a portion of his $32 trillion Medicare For All plan.

His plan is similar to a wealth tax proposed by Sen. Elizabeth Warren (D–Mass.) earlier this year, which would tax fortunes that exceed $50 million.

Despite the ambitious aims of Sanders' wealth tax proposal, there are good reasons to doubt that it will bring in nearly as much revenue as he is projecting, let alone that it will abolish billionaires.

For starters, the difficulty in valuing the wealth held by the rich on a year-to-year basis would make a wealth tax hard and expensive to administer compared to other forms of taxation.

"The uber wealthy tend to have very hard-to-value assets. They own more than publicly-traded stock, such as real estate holdings, trusts, and business ownership interests," wrote Nicole Kaeding and Kyle Pomerleau for the Tax Foundation in January, when evaluating Warren's wealth tax proposal. "It is difficult to value these assets on an ongoing basis. Imagine a large privately-held company—its value could change almost daily. How would the tax handle these fluctuations?"

The current estate tax, a one-time wealth tax on inheritance, is already a headache for the Internal Revenue Service to administer, Kaeding and Pomerleau point out. The administration of a yearly wealth tax would be even more difficult.

Politically expedient or economically necessary carve-outs and loopholes will also reduce the revenue one can expect a wealth tax to generate, says Chris Edwards, a tax policy scholar with the Cato Institute.

"If they were passed into law there would be all kinds of exemptions and exceptions like farmland. Rich people would move their wealth to those exempted areas and the government wouldn't raise that much money," he says.

This, adds Edwards, is exactly what happened in the 12 European countries that adopted wealth taxes. Revenue was disappointing, raking in on average about .2 percent of GDP. In the U.S. context that would work out to be a little under $40 billion a year, or about 10 percent of what Sanders is claiming his wealth tax will generate.

All but three of the European countries that adopted a wealth tax have since repealed it, citing low revenues, high administration costs, burdensome effects on entrepreneurship, and capital flight.

Sanders has a few ideas on how to make administration easier and prevent the rich from evading his wealth tax, including a "national wealth registry," a 100 percent audit rate for billionaires, and a 40-60 percent tax on wealthy emigrants.

Fewer exemptions, however, means a wealth tax will have harsher economic effects, says Edwards.

"The left-wingers have this idea that most wealth is gold bars underneath the mattresses of rich people," Edwards observes. "Most wealth is actually active business assets. It's the value of the assets that are actively producing and employing people in production."

Taxing these business assets would, in turn, mean less capital investment, argues Edwards, and therefore fewer jobs or lower wages for the workers who would have otherwise been made more productive by that capital investment.

The innumerate problems with a wealth tax, coupled with the fact that much easier means exist for the government to shake down the wealthy, suggests that Sanders' proposal is less about policy and more about signaling.

That is something Reason's Peter Suderman argued in a recent video, observing that "the wealth tax is best understood, not as a revenue raiser, but as a symbolic declaration of opposition to the existence of outsized wealth, regardless of how it was obtained."

 

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  1. What a total idiot. I mean bat shit crazy.

    1. He’s a communist. All he really means is “capitalists should not exist.” He doesn’t mind the government having all the money in the world, he objects to individuals having the means to control their own lives.

    2. And people thought Wesley Mouch and Ellsworth Toohey were ridiculously over the top and unbelievable characters.

      1. See also Nicolas Maduro.

        Socialists seem bound and determined to prove Ayn Rand right about them.

    3. He’s not crazy….He knew early on there will always be a niche for his extreme ideology & thus, he has had a nice cushy life for many years endorsing this BS on America! Lucky for him that Americans keep getting dumber & dumber by the day & so he & his surreal fantasies are now wildly popular!

  2. Let me guess what Bernie Sanders’ net wealth is. Three houses is probably ….. carry the two ….. $30M?

      1. Pure coincidence, I’m sure.

  3. Bernie’s decidedly anti-Koch economic rhetoric has always prevented him from joining my top tier of 2020 Democrats. It’s important to keep in mind, however, that Democrats are in fact moving toward the open borders position favored by the richest people on the planet.

  4. A wealth tax is unconstitutional regardless of it’s Bernie’s version or Lizzie’s version.

    1. Don’t worry, it won’t be a tax, it will be a penaltax. And if can’t be that, it will simply be your annual “residency fee”.

  5. So, your first objection is that this will not bring in the money projected? It’s just incredible that even here no one will raise a principled argument against tyranny. Since when does a government official have the balls to demand any american citizens ‘should not exist’?
    Not only that, but the colossal hypocrisy inherent in this millionaire putting a target sign on anyone for having too much wealth makes me wonder how anyone can take him seriously.
    Any two people can play your evil twisted game Bernie. How about millionaires shouldn’t exist?
    How about people who make over 100k shouldn’t exist?

    1. Basically every story here should just be “It violates the NAP.”

      1. Reason staff doesn’t give a f*ck about the NAP. They are happy to violate it all day long as long as they get free drugs and free Mexican hookers.

  6. raise revenue for the senator’s high-spending domestic agenda, and eliminate supposedly unjust concentrations of private wealth.

    Would President Bernie go after Putin for these reasons?

  7. What we would end up with, of course, after the wealth tax doesn’t generate enough money to fund Bernie’s agenda, is a seventy-percent tax rate on every dollar made by everyone making more than 20% above the median income. This is what most of Europe has had to do. So, the OP who commented that we should eliminate all income above $100K, wasn’t that far off. Tax the middle-class to death. Yeah, that will do it.

  8. “Let’s tax a bunch of wealth that isn’t real…its only perceived to exist and try and turn it into actual things! What could go wrong?”

  9. To a capitalist, a billionaire is a great success. That’s a shitload of wealth available for investment in generating even more wealth. Bernie favors eating the seed corn. Sure, we’ll all wind up dying of starvation when there’s no corn to plant next year, but at least we’ll be rid of those evil capitalists who hogged all the seed corn.

    1. plus in a free market, the capital gets concentrated in the hands of people who know what they’re doing, not in the hands of total nutjobs and demagogues.

      1. “total nutjobs and demagogues.”

        Remember, Bernie is the only presidential candidate who was kicked out of a hippie commune he joined for being too lazy.

  10. “Billionaires should not exist.”

    Is Bernie calling for some form of genocide?

      1. Bernie’s policies are largely indistinguishable of those of the Nazi party. I’m not kidding: read his party program and then read theirs, and compare.

  11. “Billionaires should not exist.”

    Neither should greedy money-grubbing politicians. And yet, they do.

  12. Bernie Sanders Thinks Every Billionaire Is a Policy Failure

    But not, and let me clear, *not* those of use who are merely multi-millionaires. *We* earned our money!

    1. No one can earn a million dollars honestly.

      -William Jennings Bryan

      That was back when a million was kinda like 100 million or something like that, but ok.

  13. Huh. Wealth redistribution. Gee what a surprise.

    The wealth redistributionists need to learn that if they want a European-style welfare state, they need to also have European-style taxes, which means taxes on more than just “the rich”. It “works” over there because public perception is that the tax money is spent well. It would not work here because no one above the age of 20 believes that the tax money would be nothing more than a graft machine.

    1. So true. I lived in Germany for three years. Most Americans think that Europeans put up with such high taxes because they are so much more charitable. But it’s mostly because they feel their tax money is being spent relatively well: good schools, mass transportation, healthcare, roads, Social Security. In other words, spending on which most people benefit. If the US was to move to European-style tax rates, what are the chances the extra money would benefit most taxpayers?

      1. Europeans may believe that but they are wrong. Schools are no better than US schools, mass transportation benefits mostly the elite, health care is limited, and their ROI on retirement savings is lousy (and they have to pay for that separately). Europeans are ignorant fools.

        One thing they do better than Americans, though, is cheat on their taxes.

    2. The European system only “works” because they are getting military protection welfare from the United States so they can spend all their money on butter instead of guns.

    3. I’ll add that I find it curious that these leftists want to enact European social welfare policies by implementing an even more progressive tax regime than we have now, which is much more progressive than that of the nations they otherwise seek to emulate. I also believe that the Euros tolerate high taxes because the general populace has been paying relatively high taxes for millennia. No matter what benefits our leftist politicians offer, our upper middle to lower classes will never tolerate a European-style tax system because they are completely unaccustomed to paying substantial taxes as the Euros are.

  14. I went to Amsterdam in 2013 for the grand re-opening of the Rijks museum, one of my favorites in the world. Before going, I ate some magic mushrooms – purchased legally at a Smart Shop. Anyway, after spending many hours listening to the paintings whisper to me, I left and went to a small cafe close by.

    I had a great little meal served by a very attractive woman. I was still feeling pretty good, so I tipped her 30% (on a 20-euro meal), using my credit card. She returned and said the amount was denied. I said that was impossible and please try again. Same result. Then she got a call from some faceless bureaucrat stating that my 30% tip was excessive, and it couldn’t be processed, suggesting instead that 15% would be acceptable.

    And as she explained it to me, the expression on her face when realizing her government said she wasn’t worth a 30% tip was absolutely priceless. What she learned that day is the lesson we’ll all learn if Bernie gets elected.

    1. a 30 percent tip to a cute waitress is unfair to those not genetically as gifted

    2. That wasn’t the government, that was your credit card processor.

      1. I’ve never heard of a CC transaction being denied in the U.S. because of a thirty percent tip. Why was it different over there? There has got to be something else going on.

  15. Here’s my plan: tax 100% of any politician or government employee’s income over the median American’s net wage. You wanna be a fat cat, you have to implement policies that are good for the rest of the people.

  16. It’s cute that poor people think that they’re not going to be the ones that end up paying the tax one way or another.

    1. It’s much worse than that for them, JB. They’re the also the first to go hungry and the first to end up in a ditch in the killing field.

      For every 1 percent increase in unemployment 40,000 people die.
      Free markets have done a great service to the many that were able to avoid natural selection through innovation… Those same people who would already be dead are now voting to speed up their demise.

  17. “The left-wingers have this idea that most wealth is gold bars underneath the mattresses of rich people,” Edwards observes. “Most wealth is actually active business assets. It’s the value of the assets that are actively producing and employing people in production.”

    The left-wingers have such a childishly simplistic view of the world that they think Scrooge McDuck is a real billionaire.

  18. What about millionaires with 3 houses, Bernie?

    1. It doesn’t apply to officials, dammit! They are special!

      I will never forget the documentary I watched about the Russian Revolution. Immediately after the Czar was killed, one of the revolutionary leaders moved himself into the Czar’s palace in St Petersburg and gave all the jewelry he found in there to his wife.

      The lesson is: regular folks should be be forced to “share” all they have with everyone else so as to “be fair.” When you’re the leader, you deserve to have only the best.

  19. a wealth tax on families whose net worth exceeds $32 million

    How arbitrary. I guess his family’s net worth must be about $31 million.

  20. Billionaires should not exist.

    Oh! I get it now. He’s making a comment about inflation and the federal reserve!

  21. Sanders has a few ideas on how to make administration easier and prevent the rich from evading his wealth tax, including a “national wealth registry”

    “Those in *that* registry would also, of course, have their guns confiscated.”

  22. Imagine a large privately-held company—its value could change almost daily. How would the tax handle these fluctuations?

    Easy! Just tax them every day.

  23. He’ll get rid of the billionaires (by taxing them to nothing or forcing them out of the USA), and it will fund his agenda for less than one year. Then who’s he going after?

    1. You. Oops… not suposta say that.

  24. How is this not a bill of attainder, targeting a group of people and punishing them for not committing a crime?

    How is this not an illegal taking?

    They’re not just shredding the Constitution, they’re snorting the scraps.

    1. Bills of attainder mentions specific people. They think calling it a tax provides cover for other legal objections. However, a wealth tax has problems morally, logistically, economically and practically.

  25. Lets hope you will consider updating more often so your readers might follow along. house painting

  26. Socialists should not exist.

  27. Hey Bernie, go fuck yourself, you authoritarian shitbag.

  28. I didn’t think he had the stones to nakedly put out a wealth confiscation policy, but he did. Bravo I guess?

    Does the old man still think he’s fooling anyone when he says he likes capitalism?

  29. Based on the picture at the top of this article, it looks like Mr. Sanders needs some of that money for dandruff shampoo.

    1. Nobody needs 28 kinds of dandruff shampoo.

    2. He went to the store to buy some but there were so many choices, he got confused and just left.

  30. Um, if he eliminates billionaires how will he tax them? Does he ever think anything through?

    1. Sanders: “Millionaires should not exist, present company excepted”
      Twitter: “But you’re by yourself when you said that”
      Sander: “Exactly”

  31. “a 40-60 percent tax on wealthy emigrants.”

    The Simpsons were on this years ago

    “There’s a 1000 dollar Leaving Town Tax”
    -Mayor Quimby

  32. It’s a failure because all private money has not been turned over to the socialist government he wants.

  33. I guess anyone who has managed to amass a considerable amount of wealth will have to form “closely-held” corporations to protect it?

  34. Interesting how wealth is the one minority status that we don’t protect. Everyone is so intersectional about things we can’t control, yet nobody seems to protect me even though I didn’t choose to be born rich.

    Wealth really has many of the issues of other minority groups. Nobody has any idea how much my family worked compared to others. People don’t understand the scope of responsibility or the conservative lifestyle choices we had to make to amass wealth. There are so few of us that people legitimately cannot understand our “lived experience.”

    Is wealthism a thing? Maybe it needs to be.

  35. I’ve never understand why someone would object to the existence of wealthy folks. why? it doesn’t hurt me in the slightest is some other guy is super rich. (rent-seeking lobbying aside but we all know that the problem there isn’t with wealthy rent-seekers is it?)

    It’s pure irrational jealousy plain and simple. Primitive collective impulses from when we all lived in tribes. As despicable and sad as vestigial racism is.

  36. Comrade Bernie thinks the Electoral College charges too much for tuition.

  37. The man is totally and completely economically illiterate. Those who follow and support him are economically illiterate as well.

  38. If you ran out of billionaires – which you would under his plan – where would the continued funding come from?

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