Democrats are pitching a “wealth tax” as a way of financing their outrageous spending demands. The problem is that even America’s wealthiest people don’t have that much money.
Senator and presidential candidate Elizabeth Warren has been one of the most vocal advocates for a wealth tax and is now trying to make the radical idea more palatable to voters by coupling it with a proposal for a massive federal child care program. That’s hardly the only exorbitantly expensive demand on the Democrat agenda, though.
Economist Brian Riedl calculates that the democratic socialist agenda that leading Democrats are now embracing — which “includes single-payer health care ($32 trillion), a federal jobs guarantee ($6.8 trillion), student loan forgiveness ($1.4 trillion), free public college ($800 billion), and infrastructure ($1 trillion)” — will cost an astronomical $42 trillion over the next decade.
To pay for this extraordinary level of spending, Democrats are pitching the same solution they’ve always favored: tax the rich.
But math doesn’t have an ideology, and that’s where the “tax the rich” rhetoric runs into a roadblock, because even the 70 percent income tax rate that some Democrats are proposing would fall woefully short of generating enough revenue to cover even one of their exorbitant spending demands.
As much as Democrats would like to believe otherwise, wealthy people and business owners are not a bottomless credit card available to finance a socialist utopia — as the people of Venezuela can attest. In fact, wealthy people don’t make nearly enough money to pay for even a fraction of what Democrats want.
According to Riedl, the Democrat tax hike would raise $22 billion annually, while The Washington Post estimated it would bring in around $70 billion. That means the “wealth tax” wouldn’t even generate enough revenue to cover 1 percent of the $42 trillion that Democrats wish to spend.
Even the more fanciful estimate offered by freshman democratic-socialist Representative Alexandria Ocasio-Cortez, who implausibly claims that taxing the wealthy and raising corporate tax rates would produce about $2 trillion in new revenue over 10 years, still leaves a $40 trillion shortfall that would have to be financed with either new taxes or new debt.
Once that reality sets in, Democrats would inevitably be forced to come after the middle-class because annual deficits exceeding $4 trillion are neither politically or economically sustainable.
The fundamental problem with the Democrats’ plan to “soak the rich” with taxes is that it misunderstands the source of America’s prosperity -- the free enterprise system that enables people from every background to pursue the American Dream. America’s superior economic strength is built on creating opportunities for those willing to work hard and get ahead, not punishing them for their success.
Having failed to prevent people from becoming affluent with confiscatory income tax policies, some Democrats are now setting their sights on the wealth that people have already accumulated, as well.
To make the math work, though, Democrats would have to revise their definition of “super-rich” to encompass pretty much anyone who can afford to pay their bills on time, which is precisely what Senator Warren seemed to suggest in a recent MSNBC interview about her wealth tax proposal.
“When we’re only taxing income, we’re taxing two people who may have the same income but are in wildly different economic circumstances,” Warren complained, making clear that the intention of her wealth tax is to punish people who manage their finances responsibly.
Yet, even Warren’s own economists estimate that her wealth tax would only bring in about $2.75 billion over 10 years.
The massive entitlements that Democrats are hoping to create would quite simply be unaffordable, even if Uncle Sam could wring every last dollar out of the pockets of America’s wealthiest citizens.
The next time you hear Democrats talk about taxing the rich, just be aware that they’re talking about you.
Mica Mosbacher is the American author of The Hurricane Factor: Stormside Patriots and the memoir Racing Forward. She is a member of the National Advisory Board of Trump 2020, a political strategist and a frequent guest conservative commentator on Fox News, FBN, One America News, Hill TV, BBC World, BBC Newsday, TRT, ITN, LBC and CBC Radio, ITV.