BY NAOMI JAGODA - 10/18/19
06:00 AM EDT 449
Sen. Elizabeth Warren’s
(D-Mass.) emergence as a front-runner in the Democratic presidential primary is
bringing new attention, and scrutiny, to her proposed wealth tax.
The
Massachusetts senator first called for the new tax in January, and it’s become
the foundation for how she plans on funding some of her other policy proposals.
The idea polls well and
has been championed by progressives, with fellow presidential candidate
Sen. Bernie Sanders (I-Vt.)
releasing his own wealth-tax plan last month.
But as Warren
has started to edge out former Vice President Joe Biden in a number
of state and nationwide polls, her policy stances — along with how she
communicates them — are being put under a magnifying glass, more so than
similar plans by other White House hopefuls. That scrutiny was evident on
Tuesday night, when for the first time her wealth-tax proposal was the focus of
much discussion at the primary debate in Ohio.
“She clearly
went into the debate the other day as the front-runner or the co-front-runner,
which is why she was subject to so many attacks,” said Democratic strategist
Craig Varoga, who is unaffiliated with any of the presidential campaigns.
Warren has
called for a 2 percent tax on household net worth between $50 million and $1
billion, and a 3 percent tax on net worth above $1 billion. She has said she
wants to use that revenue to finance a host of education-related proposals.
Warren has
described her plan as a 2-cent tax on the wealth of the ultra-rich. Supporters
can often be heard chanting “2 cents” at her rallies.
Michael
Linden, executive director of the Groundwork Collaborative, a progressive
nonprofit focused on economic policy, said Warren’s wealth-tax proposal has helped
to set the terms of the tax discussion in the Democratic primary.
He said
proposals to tax the rich have moved toward center stage in the 2020 race, and
that taxing the rich has become a goal in and of itself, rather than just a
means to pay for spending plans.
“A lot of that
has to do with the popularity and the capturing of the imagination of the
wealth tax,” he said.
Still, Linden
said, there remains a debate among Democrats about whether raising taxes on the
rich is punitive.
“That idea was
still apparent on that stage,” he said, referring to Tuesday night.
The wealth-tax
proposal received little attention at the first three Democratic presidential
debates that Warren participated in. It wasn’t explicitly mentioned in her
first debate, and in the third debate she brought up the proposal but wasn’t
asked about it by the moderators.
In the second
debate, there was only a brief exchange on the proposal between Warren and
former Rep. John Delaney (D-Md.).
Tuesday’s
debate — the first since Warren took the lead in a number of polls — was
different. Moderators devoted a considerable amount of time to the issue, but
in doing so Warren was
forced to play defense.
Fellow
candidate Andrew Yang,
an entrepreneur, criticized wealth taxes during the debate, arguing it would
make more sense to create a value-added tax.
He said other
countries repealed their wealth taxes because they had “massive implementation
problems and did not generate the revenue that they projected.”
Warren’s other
onstage rivals didn’t attack wealth taxes directly, and several even suggested
they might be open to a wealth tax. But they did take issue with how Warren
spoke about her proposal.
Warren
defended her proposal by saying the question isn’t why she and Sanders are
backing wealth taxes, “it's why is it does everyone else on this stage think it
is more important to protect billionaires than it is to invest in an entire
generation of Americans.”
More moderate
candidates who haven’t proposed wealth taxes but have offered other proposals
to raise taxes on the rich took offense with the notion that they wanted to
help billionaires.
“No one is
supporting billionaires,” Biden said.
Sen. Amy Klobuchar (D-Minn.),
who expressed openness to a wealth tax, added that “no one on this stage wants
to protect billionaires” but that candidates have different approaches to
taxing the rich.
“Your idea is
not the only idea,” she said to Warren, noting her own desire to roll back
portions of President Trump’s
tax-cut law.
Former Rep.
Beto O’Rourke (D-Texas) said he thinks a wealth tax could be part of a plan to
combat income inequality but added that he thinks Warren sometimes “is more
focused on being punitive or pitting some part of the country against the
other."
Warren in turn
argued that taxing income isn’t as effective as taxing wealth, and that
Democrats succeed when they "dream big and fight hard, not when we dream small
and quit before we get started."
She also said
she doesn’t have a problem with billionaires but instead thinks that those at
the top should pay more in taxes so that “every other kid in America has a
chance to make it.”
Progressives
said they thought Warren did a good job withstanding criticisms during the
debate.
“Attempts to
attack her actually put oxygen in the room for one of her most popular ideas,
which is taxing the very wealthy in order to pay for things like universal
child care and canceling student debt,” said Adam Green, co-founder of the
Progressive Change Campaign Committee, which has endorsed Warren.
But a debate
persists among economists and other tax policy experts about whether a wealth
tax is smart policy.
Linden
criticized Yang’s argument that a wealth tax would be hard to implement, saying
people had similar concerns before the U.S. instituted an income tax.
When Warren
released her wealth-tax plan, her campaign said the IRS already has rules for
valuing assets for estate-tax purposes, and the IRS would be authorized to
tighten those rules. Warren has also proposed measures to prevent people from
evading the wealth tax, including an exit tax for wealthy people who renounce
their U.S. citizenship.
Jim Kessler,
executive vice president for policy at the center-left think tank Third Way,
said he thinks it will be challenging to figure out how to assess what people
are worth every year.
“The wealth
tax is almost impossible to implement,” he said. Instead, he recommended
raising the top individual income tax rate, making changes to capital gains
taxes, and reverting the estate tax back to its previous parameters as good
starting points for how to raise taxes on the rich.
Warren’s
wealth tax isn’t the only tax issue of hers that has come under increased
scrutiny as she rises in the polls. Some of her Democratic rivals have been
criticizing her for refusing to give a direct answer to questions about whether
she would raise taxes on the middle class to pay for her “Medicare for All”
plan.
Varoga said a
primary is a vetting process, and “part of the vetting process is making sure
you can take the hit and keep on moving.”
If Warren
maintains her status as a leading candidate, she’s likely to come under more
pressure to defend her policy stances.
“Barring some
very unforeseen collapse of her campaign, this scrutiny and pressure from her
opponents, both at the top and at the bottom, is going to continue,” Varoga
said.
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