Somebody is about to become rather unpopular with the socialists in the Democratic base. 2020 candidate Andrew Yang sat down with John Harwood to take some questions and the subject of the wealth tax came up. While Yang claimed to “understand the spirit and intent of it,” he went on to say that it could be a disaster to actually implement. Supporters of Elizabeth Warren, who initially cooked up this constitutionally dubious idea, and Bernie Sanders, who recently one-upped her on it, are not going to be thrilled with Mr. Yang’s evaluation, as sensible as it may be. (CNBC)
Some of the top contenders in the Democratic presidential primary have called for a wealth tax on America’s top earners. But entrepreneur Andrew Yang, whose profile in the primary race has risen in recent months, told CNBC’s John Harwood that the policy could be a “disaster in practice.”
Yang’s campaign is built around a starkly different, though no less bold, plan to overhaul the economy: a so-called universal basic income in which all U.S. citizens receive $1,000 a month with “no strings attached.”
Yang claims the plan, which he calls a “freedom dividend,” would protect the jobs and well-being of Americans whose livelihoods are threatened by automation and technological innovation.
The Democratic base remains hungry for any form of proposal designed to tax the rich. (More correctly, to punish the rich, but tax sounds more civil.) So this isn’t going to do much to improve Yang’s already dismal standing. His RCP average currently sits at 3.6, though he has managed to get above five a couple of times recently. So it’s not as if he has that much to lose.
More interesting is the coherent argument he lays out against the wealth tax, though he leaves out one major point. What he failed to talk about was the question of whether or not the federal government could legally impose a wealth tax. Some analysts think it might sneak past a court challenge, but it would be a long time coming.
Even ignoring the constitutional questions, Yang did manage to point out a number of factors that would make such a scheme highly problematic. These include:
– Capital flight, with wealthy people renouncing their citizenship
– The logistical issues of inventorying everyone’s wealth every year
-Compliance problems, since wealthy people will have zero interest in having their wealth inventoried and then being sent a massive bill
These are all valid concerns. Even if you could manage to pass a tax like this and have it survive a challenge in the courts on constitutional grounds, putting it into effect would probably be a nightmare. You’d need an entirely new arm of IRS enforcement personnel doing nothing but chasing down records of people’s property and then hunting them down to prise the taxes from them.
The interview with Yang did remind us of his own plan to deal with wealth inequality. That’s his guaranteed basic income scheme where everyone, including those unable or unwilling to work, would get one thousand dollars per month with no strings attached. That’s only around 3.5 trillion a year we’d be shelling out. I’m sure you’ll be able to come up with that by taxing some rich people, right?