As Vox has described, she'll tax wealth above $50 million at a 2% rate, and wealth above $1 billion at a 3% rate. Emmanuel Saez (Piketty's frequent collaborator) "estimates this tax would hit approximately 75,000 families and raise $2.75 trillion over a 10-year period."
The Vox article also notes that the tax would reduce private investment, since that's what it's taxing. This is fine. Private investment has bad returns these days. Look at what Apple did with its Trump tax cut: it bought back shares of its own stock. The greatest consumer technology innovator of recent decades couldn't find a new innovative business to assemble. So it just spent the money on raising its stock price and not building anything socially productive.
Low interest rates on bonds are a further sign that private capital can't find any productive place to invest itself. Aaa-rated corporate bonds returned 8% in the mid-90s, but only 3.29% today. In other words, there's so little good stuff for private capital to invest in that investors are accepting annual returns of only 3.29%. This is what a future of increasing income inequality will look like -- the increasingly vast wealth of the rich chasing a range of investment opportunities that doesn't grow as fast. Since 1980, inequality has widened as bond rates have fallen.
We're likely to get better social returns on investment in infrastructure, child care, science, and education. Many of these things don't work as private-sector investments because there's no way for private investors to reap the social good that they've sown. The benefits of making more scientists are distributed among the many beneficiaries of their discoveries in a way that won't come back as profit to a private investor.
Great utility is achieved if the government takes the money away from private investors and makes more scientists, which profit-driven private investment doesn't do very well. Excessive focus on private investment over recent decades has led us to neglect public investment. The wealth tax removes investment capital from the low-return private sector and puts it in the more promising public sector.
There are all sorts of implementation issues to be resolved, but they're worth resolving. For example, to stop the wealthy from hiding wealth overseas, we'll need to beef up the ability of the IRS to chase down vast investments, and set up international frameworks for tracking wealth. So let's do these things!
In general, I don't recommend donating to Presidential campaigns. Definitely not general-election campaigns, but probably not primaries either. Your money has much more impact on lower-level races. Jeff Merkley's Leadership PAC, which helps us retake the Senate and put it in the hands of its most skilled progressive legislator, is my #1 pick.
But I've given $100 to Elizabeth Warren's campaign. It's a token amount, but she'll have one more small donor to boast of. Perhaps it'll help in some small way to make her plans reality.
The Vox article also notes that the tax would reduce private investment, since that's what it's taxing. This is fine. Private investment has bad returns these days. Look at what Apple did with its Trump tax cut: it bought back shares of its own stock. The greatest consumer technology innovator of recent decades couldn't find a new innovative business to assemble. So it just spent the money on raising its stock price and not building anything socially productive.
Low interest rates on bonds are a further sign that private capital can't find any productive place to invest itself. Aaa-rated corporate bonds returned 8% in the mid-90s, but only 3.29% today. In other words, there's so little good stuff for private capital to invest in that investors are accepting annual returns of only 3.29%. This is what a future of increasing income inequality will look like -- the increasingly vast wealth of the rich chasing a range of investment opportunities that doesn't grow as fast. Since 1980, inequality has widened as bond rates have fallen.
We're likely to get better social returns on investment in infrastructure, child care, science, and education. Many of these things don't work as private-sector investments because there's no way for private investors to reap the social good that they've sown. The benefits of making more scientists are distributed among the many beneficiaries of their discoveries in a way that won't come back as profit to a private investor.
Great utility is achieved if the government takes the money away from private investors and makes more scientists, which profit-driven private investment doesn't do very well. Excessive focus on private investment over recent decades has led us to neglect public investment. The wealth tax removes investment capital from the low-return private sector and puts it in the more promising public sector.
There are all sorts of implementation issues to be resolved, but they're worth resolving. For example, to stop the wealthy from hiding wealth overseas, we'll need to beef up the ability of the IRS to chase down vast investments, and set up international frameworks for tracking wealth. So let's do these things!
In general, I don't recommend donating to Presidential campaigns. Definitely not general-election campaigns, but probably not primaries either. Your money has much more impact on lower-level races. Jeff Merkley's Leadership PAC, which helps us retake the Senate and put it in the hands of its most skilled progressive legislator, is my #1 pick.
But I've given $100 to Elizabeth Warren's campaign. It's a token amount, but she'll have one more small donor to boast of. Perhaps it'll help in some small way to make her plans reality.
