Elizabeth Warren’s ‘Wealth Tax’ Would Devastate the Economy, According to New Study

A new projection from the Penn Wharton Budget Model has revealed that Elizabeth Warren’s “wealth tax” proposal would slow the American economy and reduce growth. The analysis comes after prominent liberal economists, economic advisers, and Democratic presidential candidates cast doubt on the viability of Warren’s proposal.

The New York Times: “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.”

The devastating impact on the economy would also be a sharp contrast to the economic boom sparked by Republican tax cuts in 2017. Since that legislation was signed into law, the unemployment rate has plummeted, wages have increased, and the economy has experienced consistent growth.

“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.”

In addition to damaging the economy and likely being unconstitutional, The Wall Street Journal Editorial Board highlighted the fact that Warren’s wealth tax proposal has already failed in several European countries over the last few decades.

WSJ Editorial Board: “Ms. Warren expects her wealth tax to raise some $3.6 trillion in the first decade, while Mr. Sanders promises $4.35 trillion. France’s experience suggests this is fanciful. In 2016 French economist Eric Pichet noted that the wealth tax caused a net revenue loss. Paris collected €5.4 billion from the wealth tax in 2015. Yet total tax receipts were at least €7.5 billion lower than they otherwise would have been, since investment declined and hundreds of billions of euros moved offshore.”

After Elizabeth Warren spent weeks failing to defend her support for Medicare for All, this is just the latest example of her radical policy proposals falling apart once they come under any level of scrutiny.