Election 2020

Elizabeth Warren's 'Wealth Tax' Is Punishment, Not Taxation

Does economic success deserve to be punished? The Democratic Party will have to answer in the coming primaries. Joe Biden is on the correct side of it.

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With four well-chosen words, Vice President Biden summed up the most important ideological dividing line in the Democratic presidential primary.

The comment came at the third of three fundraisers Biden held on Thursday, September 26, in Los Angeles County. Usually Biden sticks pretty tightly to his stump speech, and usually he keeps his schedule a bit lighter than three public events in a day. So perhaps it was the candor that comes with fatigue. Perhaps it was the intimacy that came with the unusually small event— a crowd of about 50. Or maybe Biden was hoping, even subconsciously, that someone would notice and get the message.

Biden joked with the well-dressed and apparently affluent crowd that they shouldn't expect a tax cut from him. Then, according to the pool report from Matt Pearce of the Los Angeles Times says, came the four words that tell a long story: "But! No punishment, either."

The clear, if implicit, contrast was with Sens. Elizabeth Warren (D–Mass.) and Bernie Sanders (I–Vt.). Warren and Sanders each have proposed a "wealth tax" that is accompanied by a punitive exit tax on anyone leaving the country to escape the wealth tax.

Democrats have been toying with these exit tax proposals for some time. The rates they float keep climbing. An expatriation tax already applies on those renouncing U.S. citizenship—they have to pay capital gains tax on the accumulated gains on their assets, reflecting a "deemed sale" at a mark-to-market price even on assets that have not been sold.

Sen. Charles Schumer (D–N.Y.) proposed an exit tax at a 30 percent rate in 2012. Hillary Clinton, as a presidential candidate in 2015, proposed an exit tax that would have hit corporations at the 35 percent corporate income tax rate that then applied. And, here in 2019, Warren and Sanders have both proposed exit taxes at the confiscatory rate of 40 percent, with the Sanders plan climbing to 60 percent on assets above $1 billion for individuals seeking to avoid his annual wealth taxes of up to 8 percent.

Biden is correct that threatening to seize 60 percent or 40 percent of the property of a member of an unpopular minority group who wants to leave a country is functionally not taxation, but punishment. The number of people subject to such a tax is small enough that it could be subject to the U.S. Constitution's prohibition, in Article I, against a bill of attainder.

Whether the exit or wealth tax is, by definition, a tax or a punishment turns out to be one of the fundamental issues in whether it is constitutional. An opinion by Chief Justice Warren, discussing the Constitution's Bill of Attainder clause in the 1965 Supreme Court case United States v. Brown, cited Alexander Hamilton: "If the legislature can disfranchise any number of citizens at pleasure by general descriptions, it may soon confine all the votes to a small number of partisans, and establish an aristocracy or an oligarchy; if it may banish at discretion all those whom particular circumstances render obnoxious, without hearing or trial, no man can be safe, nor know when he may be the innocent victim of a prevailing faction. The name of liberty applied to such a government would be a mockery of common sense."

The clause, Justice Warren wrote, "was not to be given a narrow historical reading (which would exclude bills of pains and penalties), but was instead to be read in light of the evil the Framers had sought to bar: legislative punishment, of any form or severity, of specifically designated persons or group."

Justice Warren quoted an earlier decision, United States v. Lovett: "Legislative acts, no matter what their form, that apply either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a judicial trial are bills of attainder prohibited by the Constitution."

Justice Warren noted "It was not uncommon for English acts of attainder to inflict their deprivations upon relatively large groups of people, sometimes by description, rather than name." In this case the description would be "billionaires."

What an ironical historical twist it would be if a policy of President Elizabeth Warren ended up struck down on the basis of a precedent by Chief Justice Earl Warren—and on the basis of an accurate description by Vice President Biden that the proposed tax amounts to a "punishment."

Beyond the legal questions, interesting though they are, are moral and prudential ones. Does economic success—which usually, if not always, involves hard work, risk-taking, and creating a product or service that many people find valuable enough to voluntarily pay for—deserve to be punished? The Democratic Party will have to answer in the coming primaries. Biden is on the correct side of it. His challenge will be to articulate a case that goes beyond his four words in Los Angeles, which were a fine start.

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  1. . An expatriation tax already applies on those renouncing U.S. citizenship

    I realize the victims of this are not popular, but at least in principle, this is a major human rights violation.

    1. Sure is.

    2. Metazoan…State your case. I am an agnostic on the question. But you made a bold statement – I’d like to hear your reasoning (not being sarcastic).

      1. Whether it’s “punishment” or something else, exit taxes are an admission that your country is a failure. They show that a country has lost its ability to attract and retain entrepreneurs and innovators. And that’s exactly how foreign markets and immigrants will read it.

        Wealth taxes are the kinds of policies fascists and socialists pass.

        1. Here is the real reason fro the expatriation tax.

          US expats living/working abroad that retain their US citizenship have to pay US federal income taxes.

          1. American citizens do NOT pay taxes on the first $102,000 they make living abroad or as expats.

      2. In order to exercise my innate freedom of movement and free myself from the jurisdiction of a government, my property will be seized, by force if necessary.

  2. “Does economic success deserve to be punished? ”

    Of course economic success deserves to be punished.
    Otherwise people might start making more money than our wonderful ruling elites suppressing us and our beloved socialist slave state might turn into a capitalist country replete with freedom, financial independence, people acting responsibly and will have no need for our obvious betters.
    What a nightmare that would be!

    1. The thing is, we don’t need 23 kinds of deodorants, and it is only fair that those who produce such extravagances need to be punished for wasting the collective resources.

      1. Good point Comrade.
        Also, the collective doesn’t need food, clean water, electricity, shelter or clothes.
        Feeding them once a week while they learn the lessons of socialism in the Arctic Circle is more than enough for them.
        Otherwise, they will get spoiled.

      2. Not only that software and hardware moguls got rich off of us and they provide no support for their products.

        Off with their heads!

    2. What sort of ownership is worse than self ownership?

      That sort of thing gets out of hand and next thing you know there is no more ruling class.

      Can’t have that.

  3. “So Senator, under a Warren administration, what exactly would distinguish the government from the Mob?”

    1. The government would be run by a Queen.

      Queen Elizabeth.

      1. Queen Lizzie of the High Cheekbones, First of Her Name

    2. “Instead of a Dark Lord, you would have a queen, not dark but beautiful and terrible as the dawn! Tempestuous as the sea, and stronger than the foundations of the earth! All shall love me and despair!”

      1. If it is Kate Blanchet I am in.

    3. The mob is the group that gives the “government” its legitimacy.

      MAJORITY RULZ! ONE MAN ONE VOTE! DEMMMMMOCRAAAACYYY!

      1. Yeah, it dismays me how many people fail to understand that the point of a constitutional republic is specifically to place limits on what laws can be enacted through the democratic process. It is explicitly designed to prevent majoritarian tyranny.

    4. “The fact that it’s no longer run by a literal agent of the mafia?”

  4. So they move out of the US and then can’t be taxed for their property. Then the middle class cover that working jobs that will probably leave with the rich.
    I’d think legalizing all drugs would be a smarter move and only arresting those that sell them without paying their taxes.

  5. Well, it’s a good thing we’re throwing Biden under the bus to get rid of Trump, then!

    1. To be honest, I’m really not sure that successfully removing Trump from office would work out well for the blue team. I am hard pressed to think of anything that would mobilize the red team’s base more than seeing “their guy” removed from office by what they are undoubtedly going to consider an illegitimate process.

      I mean, take a moment to consider how Pelosi had previously avoided the impeachment issue in large part because she wanted to shield some vulnerable seats from a vote that could sink them.

      I think this is an example of how political parties really aren’t some kind of masterful, well-crafted conspiracy. It seems more that the blues had been holding out this rhetorical line, because it drove the base wild, but now circumstances have gotten away from them and they’re crashing along this path that probably doesn’t lead anywhere good for them.

      While I definitely don’t like Biden very much (I’m a libertarian, after all) I think running a campaign to the center would’ve probably been a lot more likely to win them the power they covet than this crazy leftward slip-n-slide they’ve got going on. People out there – not just blue teamers, but independents too – are tired of having to care who the president is. Biden should’ve made his slogan “America needs a nap.” I think he’d’ve done a lot better than expected, but I guess that sort of thinking isn’t really welcome in political discourse of any color these days. Even the red team wants a big, strong, beautiful government these days.

  6. At its core, Koch / Reason libertarianism seeks to create an economy that works best for the 10 richest people on the planet. So it’s entirely valid to analyze how the next President will affect the wealth of people like our billionaire benefactor Charles Koch.

    As a Warren supporter, I guarantee Mr. Koch will do better under her government than he’s doing in this #DrumpfRecession. We know why his net worth is stagnating at a pathetic $60 billion — it’s because Drumpf’s tariffs and immigration restrictions have ruined our entire economy. Warren, of course, would discontinue those disastrous policies.

    #VoteDemocratToHelpCharlesKoch
    #LibertariansForWarren

    1. “At its core, Koch / Reason libertarianism seeks to create an economy that works best for the 10 richest people on the planet.”

      Free market capitalism is the ONLY system known that actually improves the lives of the ordinary man. It works so well, those said to live in “poverty” in the US are richer than 80% of every other human being alive and richer than 99% of all humans who ever lived.

      “As a Warren supporter, I guarantee Mr. Koch will do better under her government”

      The richest always prosper more under corrupt democrats, whose policy it is to rob most Americans to pay themselves and their cronies.

      “than he’s doing in this #DrumpfRecession.”

      The fastest growing economy and lowest unemployment with the fastest growing incomes in over 20 years is a recession? Heh.

  7. Biden joked with the well-dressed and apparently affluent crowd that they shouldn’t expect a tax cut from him. Then, according to the pool report from Matt Pearce of the Los Angeles Times says, came the four words that tell a long story: “But! No punishment, either.”
    Wink Wink. This was a shout out to Hunter.

  8. People who spend a lot of time thinking about how much someone else’s “fair share” should be are the ugliest kind of folks.

    1. Agreed. I get uneasy around those that claim another has too much and they often fail to understand how systems like this work. They’re the ones with extreme greed.
      If you head a company that employs hundreds of thousands of people directly and hundreds of thousands of people indirectly then you getting millions a year makes sense. Your leadership can make one mistake that can cost billions and cause people to lose their livelihoods.
      Meanwhile, if you work at a grocery store someone can be trained to do your job in 2 weeks and they could do it better.
      The complainers are almost always people in positions that anyone can do.

      1. The politician is the greedy one.

        The mob voting for the politician is guilty of envy.

    2. The odd thing is that they have yet to define what a “fair share” is.

      1. And they never will, because they’ll adjust it as needed so they can take whatever they want to.

  9. What would compliance look like under a wealth tax? Would every taxpayer have to list everything they own and its value, in their wealth tax returns — or would the IRS just trust them to say “I declare under penalty of perjury that my net worth is less than $50 Million”? What would a wealth tax audit look like? Would IRS agents ask you to prove the value of everything you own; and would they swoop down on your house and safe deposit boxes to make sure you had listed everything? And after this was done, and the government had records of every piece of property owned by every taxpayer, who would be trusted with this information — Lois Lerner?

    1. “What would compliance look like under a wealth tax?”

      A 3-bedroom ranch-style home on a modest lot insulated with gold and silver bars and a Toyota Tercel in the garage.

  10. What a fucking cunt.

    1. She should be in prison for even suggesting things like this.

  11. https://en.wikipedia.org/wiki/Paper_wealth

    I’m sure turning a bunch of accounting entries into more dollars chasing actual goods and services will turn out fine.

  12. The problem with socialism is not so much in how the money is spent and distributed. It is that there will be so much less of it to spend.

    1. Why can’t Trump just print more of it?

      1. Indeed, there is no good reason we cannot print an unlimited supply of Euros.

      2. Gosh Tony, that sure worked great for us when Obama did it.

        1. And the Venezuelans are thrilled with the result!

  13. THIS IS PUNISHMENT!!!!!!
    says Ira Stoll

    Editor of FutureOfCapitalism.com
    Columnist for the Algemeiner and the Las Vegas Review-Journal
    Writes a syndicated column for the The New York Sun
    Previous North American editor of the Jerusalem Post
    Graduate of Harvard (was president of the Jock club Crimson)

    Biography: NONE!! for all intents and purposes, Ira Stoll magically appeared in 1990 fully grown, and never existed prior, with a huge pile of money.

    THIS IS PUNISHMENT! I’VE NEVER HAD TO DO REAL WORK A DAY IN MY LIFE!!!

    1. At this point, if I can’t find out who your parents are, and your country of origin from a websearch, I assume you are either a spy or a Google Tensorflow Bot.

      1. At this point, we read scumbags like you and KNOW you’re a fucking lefty ignoramus.
        Fuck off and die.

  14. “Warren and Sanders each have proposed a “wealth tax” that is accompanied by a punitive exit tax on anyone leaving the country to escape the wealth tax.”

    When wages are taxed biweekly, that’s *not* punitive.

    When capital gains aren’t taxed for years, but are taxed before you leave the country, and at a much lower rate than wages, that’s *is* punitive.

    I suppose it goes with :
    “It’s a free market when working Americans pay income and payroll taxes, but it’s *not* a free market when Slaver Emperor Xi pays a penny of tariff.”

    #LibertariansForTheGlobalistRulingClass

    1. You understand that when America creates tariffs, Americans pay those tariffs, right?

      And to be clear, most libertarians are opposed to income tax, full stop. (It certainly isn’t “free market.”) While we might not always have time to point out that the government is a criminal conspiracy in every discussion on every issue, it doesn’t mean that we have embraced the positions of our opponents.

    2. Libertarians are AGAINST income and payroll taxes, dipshit.

  15. “Does economic success—which usually, if not always, involves hard work, risk-taking, and creating a product or service that many people find valuable enough to voluntarily pay for—deserve to be punished? ”

    Reason could ask that question about *wages* everyday.

    Odd that they reserve their outrage for when capital gains are at issue.

    1. Well don’t you know- capitals gains which are more than ever used for the very wealthy who put in all that “hard work” of employing a few people to move money around, is a “very honest living” meanwhile the people who actually MAKE the product that has value get taxed at around 30%.

      Fair? Of course not but this is a Koch funded website. You can see where they earn their bucks from.

      1. Hush, people with 3-digit IQs are talking.

      2. “Well don’t you know- capitals gains which are more than ever used for the very wealthy who put in all that “hard work” of employing a few people to move money around, is a “very honest living” meanwhile the people who actually MAKE the product that has value get taxed at around 30%.”

        Tell that to the lefty scumbag Buffett; he only takes $100K as an annual wage and gripes that he’s taxed too low.
        Scratch a lefty, find a lying hypocrite.

    2. What party of “freedom” is the hard part?

      Despite what I am sure will be a forthcoming attempt to tendentiously define down the concept of “voluntary”, wages aren’t set by the government except at the bottom end of the range. They are mutually agreed upon between the employee and the employer and either is free to terminate the relationship.

      This is 100% not the case in the relationship between the government and the governed, which is why Reason doesn’t waste its time on that kind of bullshit argument.

      If you think your work is worth more to the employer than what he wants to pay you, there is nothing stopping you from finding another employer who will. Or for that matter, becoming the employer and selling the “valuable product or service” yourself.

      All that being said, getting a W2 and a guaranteed fixed biweekly paycheck is the very opposite of “risk taking”, so take that ridiculous entitled socialist bullshit somewhere else.

      1. You forgot to explain why Reason reserves their outrage over taxation to capital gains and not wages.

    3. “Odd that they reserve their outrage for when capital gains are at issue.”

      It’s not odd at all you tell bald faced lies. It’s simply expected from your dishonest kind.

      FYI, capital gains are made off investing post taxed dollars, i.e., every single capital gains tax is a double tax.

  16. Funny. It’s “punishment” to charge those earning sooooo much that we ENCOURAGE them to do so yet the people who actually end up paying the bills- ie. the little people, the commoners, etc.- its “just fine.”

    More BS from this site where somehow it’s ok to screw the little guy so long as the people on top make just a few dollars more to spend on their multiple yachts.

    1. Everything is so terrible and unfair.

      Haha. You ugly.

    2. “More BS from this site where somehow it’s ok to screw the little guy so long as the people on top make just a few dollars more to spend on their multiple yachts.”

      Is the world unfair to you, wearingit? Do you always make stupid decisions and then have to live with the results?
      Well, get used to it. You’re a fucking lefty ignoramus, and the rest of your life it gonna be like that.
      And I’m laughing, you pile of shit.

    3. The fact that they make so much is proof consumers vigorously encourage them to earn that much.

  17. i would heavily tax highly paid managers whose firms feed largely at the teat of the federal government, YES!

    1. If it’s so easy to make the big bucks, why aren’t you doing it?

      1. You mean why doesn’t anybody join in taking money from the federal government?

        Easy: it wouldn’t work. The federal government can bestow its favors and handouts only selectively because it can only ever redistribute a small percentage of the economic value generated in a country. And the federal government spends those bribes on people who can keep it in power.

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  19. Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

    This is known as “bad luck.”

    — Robert Heinlein

  20. Does economic success deserve to be punished? The Democratic Party will have to answer in the coming primaries. Joe Biden is on the correct side of it.

    That’s because Biden’s family has acquired a huge fortune through corruption and influence peddling; he doesn’t want to have to disclose that or pay taxes on it.

    Warren seems to have largely squandered her money and she is envious of anybody wealthier than her. That’s why she wants to tax “big fortunes”.

    1. Look on the bright side. Trump won’t have to worry, since he has no wealth. Although I’d like to see a wealth tax assessment on the “value” of his “brand.”

  21. When capital gains aren’t taxed for years, but are taxed before you leave the country, and at a much lower rate than wages, that’s *is* punitive.

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    1. Capital gains are made from investing post tax dollars, i.e., ALL CAPITALS GAINS TAXES ARE DOUBLE TAXES. In other words, by definition, anyone who pays capital gains taxes pays HIGHER tax rates than any who merely pay income taxes.

  22. My profession as a farmer means sometimes I have meager income, sometimes exorbitant income, and sometimes I lose income. I am not jealous of anyone that has more income or that is a trust funder or is rich for that matter, this jealousy and or hatred for the fortunate is not the America I know. If you want to be fair chief fake Indian, then propose a flat tax. Punitive taxation is fundamentally wrong. It is not what the founders envisioned for this country. It is what Karl Marx envisioned for the world. And, we all know how that worked out where it was tried.

  23. Actually it’s not punishment, it’s taxation.

    Taxation is the fee we all pay so that we can live in a non-shithole country.

    Since the wealthy have found ways to zero-out their income taxes, forcing all of us to pick up the bill for the civilization the wealthy benefit the most from, a wealth tax might be a sound alternative proposal.

    And if you can’t bring yourself to support taxing inheritance, then you don’t really care about innovation and creating useful products and blah blah blah. You care about sheltering wealth from taxation. It’s the main purpose of libertarianism. And what a noble goal it is. But be honest about it.

    1. Fuck off, Tony. Just because your parents don’t have anything for you to inherit, you want to steal from everyone else.

      You really don’t think there are enough taxes out there already?

      1. Well, all you have to do is look at the deficit.

        1. How much did you pay last year in taxes?

        2. The deficit is 100% caused by the reckless spending of politicians elected to office by greedy parasites like you who elect those politicians to rob your fellow Americans to greedily line your own pockets.

    2. “”Taxation is the fee we all pay so that we can live in a non-shithole country.””

      Ha ha ha, what the tax rates in shithole countries?

    3. Where do you live.

      Pretty much every European I’ve met in NYC likes being here partly due to low taxes. It gives them more disposable income than what they had at home. It allows them to enjoy more of the fruits of their labor.

    4. I mean, you understand that the effective rate of taxation in third world countries is much higher than the US, right? Particularly if you’re talking about the lower income folks, due to more regressive tax structures, sales taxes and tariffs in particular (lot of protectionism in corrupt countries) and of course, the unofficial but very real cost of high government corruption.

      Also, if you subtract the value of government benefits received from tax dollars paid, the wealthiest 20% in the US are the only ones who are effectively paying any federal taxes. Far from zeroing it out, mon ami.

      I am utterly baffled by the notion that an inheritance tax somehow supports innovation. I can’t really draw any line of reasoning out of your argument there, so you’ll have to let us in on just how you got there. Preventing people from giving their money and other property away after they no longer need it (without giving the government a cut) seems like a tough practice to defend, to me.

      More centrally, you suggest that the wealthy benefit more from “civilization” than the rest of us, which is, uh, categorically untrue. People engage in a transaction when the value of what they’re getting is greater than what they’re giving up. So when someone like, say, Bill Gates creates something that a very large number of people wish to purchase, they’ve enriched the world by a considerably greater amount than the world has enriched them.

      Now, if you want to specifically talk about taxing the wealth of people who’ve parlayed government-granted privileges and largesse into sizable fortunes, perhaps you have a point. But if there’s one thing that political donors wouldn’t go for, it would be a tax on their own rent seeking.

    5. Actually Tony, the wealthy pay most of the taxes according to the Treasury. But I don’t expect you to be honest, or knowledgeable.

    6. “Taxation is the fee we all pay so that we can live in a non-shithole country.”

      This is a bald faced lie. The shitholiest countries in the world have far higher tax rates than the US.

      “Since the wealthy have found ways to zero-out their income taxes”

      This is a bald faced lie.

      “And if you can’t bring yourself to support taxing inheritance, then you don’t really care about innovation and creating useful products and blah blah blah.”

      This is a bald faced lie. Only those who hate innovation, creating useful products, etc. want to impose inheritance taxes.

  24. she always looks like she’s struggling to breathe in our atmosphere

  25. Is it just me or does that picture of Biden look like Jeff Dunham’s Walter puppet?

    1. I’ve said that before; dead ringer.

  26. The purpose of a wealth tax is not punishment and it is not to collect needed tax money. The purpose is to narrow the Gap between the rich and the rest.

    The most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

    A wide Gap negatively affects poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

    1. “The purpose of a wealth tax is not punishment and it is not to collect needed tax money. The purpose is to narrow the Gap between the rich and the rest.
      The most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.A wide Gap negatively affects poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.”

      Fuck off and die, slaver.

  27. “Does economic success deserve to be punished? The Democratic Party will have to answer in the coming primaries. Joe Biden is on the correct side of it.”

    When crazy uncle Joe is the adult in the room; there’s trouble.

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