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Warren Offers a Wealth Tax Calculator for Worried Billionaires
Elizabeth Warren’s proposed wealth tax seems to have unsettled some of the country’s wealthiest citizens, inspiring criticism from the likes of Bill Gates and Leon Cooperman — and maybe playing a role in Michael Bloomberg’s renewed interest in joining the 2020 presidential race. Following an exchange with Gates earlier this week, after the Microsoft founder said, “when you say I should pay $100 billion, O.K., then I’m starting to do a little math about what I have left over,” Warren released a “calculator for the billionaires” on her campaign website to illustrate how it would work. Gates wouldn’t be faced with anything like a $100 billion annual tax bill. “Some billionaires seem confused about how much they would pay under Elizabeth’s Ultra-Millionaire Tax. Don’t worry, now we have a calculator for that too,” the campaign said. Warren’s calculator, which you can see here, asks simply, Are you a billionaire? A positive response allows users to enter their net worth for a quick calculation of taxes that would be owed under her proposals (2% on household wealth over $50 million, rising to 6% on household wealth over $1 billion). The page includes handy shortcuts (see below) for three of her billionaire critics, and elsewhere there are links to tax estimates for other well-known superrich critics, including Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg and JPMorgan Chase’s Jamie Dimon.
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The calculator provides an estimate of taxes owed based on current net worth. For example, based on an estimated net worth of $107 billion, Gates would owe $6.4 billion next year. Bezos would owe $6.7 billion, Bloomberg would owe $3.1 billion, Zuckerberg would owe $4.5 billion and Dimon would owe $55 million. Those aren’t their total tax bills, just what they’d have to pay under Warren’s wealth tax. The calculator also provides a message for critics who may have concerns about the impact of the wealth tax: “Don’t worry too much about billionaires - if history is any guide, if they do nothing other than invest their wealth in the stock market, it’s likely that their wealth will continue to grow.” Gates, for example, reportedly earned more from his investments last year than he would have had to pay under Warren’s wealth tax. Warren’s campaign says the wealth tax would affect only 75,000 families, while generating enough revenue “to cover universal child care, quality public education, forgive student loan debt, provide free public college, and help finance Medicare for All.”
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Editorial of the Day: What Bill Gates Gets Wrong
Elizabeth Warren wasn’t the only one pushing back on Bill Gates’s comments about her wealth tax proposal. The New York Times Editorial Board notes that tax rates were considerably higher when Gates founded Microsoft in 1975, and that didn’t stop him from building his business or attracting investors. “Let’s get a few things straight,” The Times editorial says. First, the wealthiest Americans now face a much lighter tax burden than they have in the past: “In 1961, Americans with the highest incomes paid an average of 51.5 percent of that income in federal, state and local taxes. Half a century later, in 2011, Americans with the highest incomes paid just 33.2 percent of their income in taxes, according to a study by Thomas Piketty, Emmanuel Saez and Gabriel Zucman published last year. Data for the last few years is not yet available but would likely show a relatively similar tax burden.” Second, federal tax receipts as a share of gross domestic product have been falling over the past few years: “The federal government needs a lot more money. Decades of episodic tax cuts have left the government deeply in debt: The Treasury is on pace to borrow more than $1 trillion during the current fiscal year to meet its obligations. The government will need still more money for critical investments in infrastructure, education and the social safety net.” That doesn’t mean that Warren’s wealth tax is necessarily the answer, and the Times editorial makes clear it is not an endorsement of her specific plan, saying that it and a similar proposal from Bernie Sanders “require careful consideration” as part of a debate over how much money the government needs and how best to generate that revenue. But raising taxes on the rich will be necessary, and there’s little evidence “that tax increases of the magnitude proposed by Ms. Warren and other candidates for the Democratic presidential nomination would meaningfully discourage innovation, investment or economic growth.” In any case, cutting taxes hasn’t delivered the innovation, investment and growth that were promised: “Congress has slashed taxation three times in the past four decades, each time for the stated purpose of spurring innovation and investment and growth. Each time, the purported benefits failed to materialize. President Trump initiated the most recent experiment in 2017. The International Monetary Fund concluded in a recent report that it had not worked.” Read the full Times editorial.
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Congress Wants to Push Shutdown Deadline into December
The House will vote the week of November 18 on a short-term spending bill intended to avert a government shutdown later that week, House Majority Leader Steny Hoyer (D-MD) said in a letter to colleagues on Friday. A stopgap spending bill passed in September is set to expire on November 21, and lawmakers have struggled to make progress on top line funding allocations and the 12 required annual appropriations bills, making another short-term extension necessary. The House has passed 10 of the 12 spending bills, and the Senate has passed four, but the two chambers have not yet worked out the differences in those bills. House and Senate appropriators are reportedly set to meet next Tuesday to resume their negotiations, with lawmakers expressing optimism that the process is moving forward. Hoyer did not specify how long the new stopgap would last, but congressional leaders and the White House are reportedly eyeing a deadline of December 13 or 20. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell have reportedly agreed to a goal of passing all 12 spending bills before the end of the year. “I remain hopeful that we can finish our work and fully fund the government before the end of the year,” Hoyer said in his letter. Those hopes might be helped by a reported change of heart on border funding demands from the White House. As Roll Call reported earlier this week: “The Trump administration is backing off its demand for $8.6 billion in fiscal 2020 border wall spending in negotiations with top congressional leaders and appropriators, according to a source familiar with the talks.
“That’s not just a recognition of reality — Congress hasn’t appropriated more than $1.375 billion for the wall in each of the past two fiscal years. It also reflects a realization that the administration risks losing a substantial boost in military spending and other GOP priorities if current stopgap funds end up extended for the entire fiscal year.”
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Buttigieg’s $1 Trillion Plan for Free Tuition, Child Care and Housing
Democratic presidential contender Pete Buttigieg on Friday released more than $1 trillion worth of proposals that focus on education, housing and child care. The plans include: -
$700 billion for pre-K and child care, to fund free programs for low-income families and reduce costs for others.
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$500 billion to reduce the cost of higher education, with free tuition at public colleges for most families earning less than $100,000.
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$430 billion for affordable housing, intended to assist 7 million Americans.
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$400 billion tax cut for low-income families, largely for an increase in the earned income tax credit to provide an additional $1,000 to 35 million families.
Altogether, Buttigieg has proposed roughly $5.7 trillion in spending on new programs, and on Friday he provided some ways to pay for them, including: -
$2.1 trillion by increasing capital gains taxes on the top 1%.
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$2.2 trillion by reversing Trump’s tax cuts for the wealthy.
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$675 billion by trimming health care costs.
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$100 billion by charging banks more for risk.
Reaching for the middle: Buttigieg continues to make a play for the center of the Democratic party, somewhere to the left of Joe Biden but well to the right of Bernie Sanders and Elizabeth Warren — and it appears to be paying off. “Taking the lane between Biden and the party’s left wing seems to be working for Buttigieg, at least in Iowa, where’s Mayor Pete has climbed in the polls,” Vice’s Alex Lubben wrote Friday.
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Your Prize for Making It Through the Week
Awwww. A couple in Texas has been named the oldest married couple in the world by Guinness World Records, CNN reports. John Henderson is 106, and his wife Charlotte is 105. They’ve been married since December 15, 1939. Read more of their story here.
Send your tips and feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can sign up here for their own copy of this newsletter.
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