Warren wealth tax could slow economy, early analysis finds

The assessment found that if the tax raised as much new federal revenue as Ms. Warren intends, and if the proceeds went toward reducing the federal debt, annual economic growth would slow from an average of 1.5 percent to an average of just over 1.3 percent over a decade.

To put the finding in context: Penn Wharton estimated in 2017 that President Trump’s tax cut would increase economic growth by roughly 0.06 percentage points per year over a decade, an effect that was much smaller than White House officials predicted. Its estimate of Ms. Warren’s policy implies the wealth tax would have an effect that is three times as large as the Trump tax cuts — but in the opposite direction.

Economists who favor Ms. Warren’s plan say the analysis does not accurately account for the benefits to economic growth from the new government spending programs she would fund with the tax revenue, including universal child care, increased education funding and student loan forgiveness.