The Democratic primary, set to be a dog fight, is underway and thus far it seems to be a competition between candidates who can promise the most “free” consumer goods. At the front of the “free” (which is code for taxpayer funded) competition, is Sen. Elizabeth Warren (D-MA), who seeks to boost her poll numbers with her economic policies, no matter how unfeasible.
Warren laid out her “2-cents” plan during her appearance on "The View" Thursday. The plan is based on punishing the most wealthy, specifically the top 75,000 households in America; it seeks to take ‘two cents’ off of each dollar of wealth from the top one-percent, after they reach the 50 million mark. Billionaires would be taxed an additional one percent on top of this.
This wealth tax mirrors the proposals of Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez in that the "2-cents" wealth tax sounds wildly appealing. The senator was rightly advised by her staff to hide behind easy talking points such as "tuition-free college," "universal child care," and "canceling student loan debt."
There are so many obvious flaws with this plan besides the fundamental, ideological pipe-dream that these social programs should exist and be funded by the American taxpayer. Most notably that the math behind this plan is insanely optimistic and flawed. There is virtually no way that a wealth tax, which is different than a typical income tax, could fund all of these social programs; wealth taxes are very pretty on paper, but in practice, almost never add up to the projected revenue because wealth, as opposed to income, is much easier to shift around or invest. There is also little substantive research that backs-up Warren’s claims; the campaign’s hired research being the sole reliance is problematic, too.
Perhaps the biggest flaw in Warren’s plan, which has been a concern since she first floated it, is the issue of constitutionality. Section 8 of Article 1 gives Congress the power to tax, provided that the tax is uniform. However, Section 9 prohibits “direct” or “capitation” taxes that are not based on proportion of population. After multiple court cases debating the definition of a direct tax, the 16th amendment established that only income taxes could be implemented by Congress, with no regard for apportionment necessary. The amendment strictly prohibits taxes on anything besides income. This explicitly labels Warren’s plan as unconstitutional and would likely lead to a Supreme Court challenge that would probably be struck down, even though Chief Justice Roberts upheld the 2012 individual mandate under Congress’s taxing power.
Warren’s plan is not unique among the platforms of 2020 Democratic contenders in that it promises appealing social programs via “the 1 percent,” who are viewed as evil and greedy by Democrats. As Joy Behar warned Warren during her appearance on “The View,” many conservatives will label her “2-cents” plan as a socialist policy. Behar is exactly right: Conservatives will call this plan exactly what it is: a pathway to socialism filled with utopian social programs funded by the American taxpayer.