Sen. Elizabeth Warren has made a name for herself in the Democratic primary as a woman with a plan. Her liberal policy proposals are sweeping and often expensive, a fact that her rivals have seized upon as she has risen in the polls. And the policy that is intended to fund her vision is no less ambitious.
Warren wants to tax the country’s richest citizens on their accumulated wealth, not just their income. Instead of a more traditional approach to raising money from the rich, like hiking income tax rates, Warren’s wealth tax plan proposes a radical new approach to taxation that would target the fortunes of the nation’s wealthiest people by imposing a tax on all household assets — not just income — above the $50 million mark. And Sen. Bernie Sanders has even announced a more aggressive proposal that would cut some billionaires’ wealth in half in 15 years.
The idea of using a wealth tax to fund some of 2020’s bigger policy proposals is seductive. If it works, it could kill two birds with one stone — both curbing rising income inequality by redistributing some of billionaires’ wealth and providing a new source of tax money to fund social programs. It’s pretty popular, too, among Democratic primary voters. But while most Democratic candidates are united around the idea that the rich should be paying more in taxes, they’re not all convinced that a wealth tax is the best way to do it. Entrepreneur Andrew Yang has expressed skepticism about how it would work in practice, saying that it would have “massive implementation problems,” while Sen. Amy Klobuchar has said, “When I look at this, I think about Donald Trump,” suggesting that the plan might be too divisive for a general election.
How serious a problem are these criticisms for Warren? Could her rivals in the primary undercut one of her signature ideas by arguing that a wealth tax is the wrong solution to the problem of income inequality? There is a debate percolating among experts about whether her plan is practical or even constitutional. But there’s also disagreement about how fatal those flaws would be.