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An analysis from the University of Pennsylvania’s Penn Wharton Budget Model (PWBM) released this week found that Sen. Elizabeth Warren’s (D-MA) wealth tax would not raise as much as her campaign claims.
Warren has vigorously pitched her “two cent” wealth tax on the campaign trail as a way to pay for a swath of big government proposals. Her plan, also dubbed the “Ultra-Millionaire Tax,” levies a two percent wealth tax on those with over $50 million in assets. The percentage increases to six percent for wealth over $1 billion. Her campaign estimates that the plan would result in $3.75 trillion in revenue over a decade.
Per her plan:
That’s why we need a tax on wealth. The Ultra-Millionaire Tax taxes the wealth of the richest Americans. It applies only to households with a net worth of $50 million or more—roughly the wealthiest 75,000 households, or the top 0.1%. Households would pay an annual 2% tax on every dollar of net worth above $50 million and a 6% tax on every dollar of net worth above $1 billion. Because wealth is so concentrated, this small tax on roughly 75,000 households will bring in $3.75 trillion in revenue over a ten-year period.
PWBM - Warren - Campaign - Estimate - Years
However, the PWBM suggested that the Warren campaign’s estimate is off and could result in up to $1.4 trillion less — $2.3 trillion and $2.7 trillion over ten years — and could cause the economy to contract “between 0.9% and 2.1% by 2050 — depending on how the new revenue is spent,” the Associated Press reports. It could also result in hourly wages falling by 2050.
The key takeaways, per the analysis:
PWBM - Proposal - Years - Effects - Effects
PWBM estimates that the proposal would raise about $2.7 trillion over fiscal years 2021-2030, not including macroeconomic effects. Including macroeconomic effects, PWBM estimates that the proposal would raise about $2.3 trillion over the same...
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