Democratic Senator Elizabeth Warren is out with yet another tax increase proposal to fund the far left’s wish list.
Healthcare for All, free college tuition, and universal (government) childcare are just some of her desired priorities. However, the new tax schemes she proposed would hardly raise a drop in the bucket to pay for them leaving taxpayers and future generations on the hook for breathtaking debts. Furthermore, by penalizing successful companies it would discourage transparency among public companies and potentially discourage them from growing or private companies from going public at all.
Warren, who is running for president, recently proposed an additional 7-percent corporate tax on every dollar of profit above $100 million that any publicly-traded company reports each year. This is on top of any taxes they currently pay including state and local as well as international taxes.
Her targets are massive companies that she feels don’t pay enough U.S. taxes like Amazon. By targeting an estimated 1,200 companies she hopes to raise $1 trillion over a decade.
Here’s the irony: $1 trillion dollars is too minuscule to be a “downpayment” on the $93 trillion price tag of the Green New Deal as she suggested. $1 trillion hardly covers the $33 trillion price tag of Medicare for All as well.
When added to the $2.75 trillion Warren expects to raise from her Ultra-Millionaires tax on about 75,000 U.S. households, that’s still not enough to fund the costly government spending sprees that she and others like Alexandra Ocasio-Cortez envision.
Warren is trying to fill the Grand Canyon with a bucket of water.
Raising taxes seems like her solution to every problem, but it’s the wrong solution because it discourages the economic activity that drives growth in our economy, hiring of workers, and, in turn, government revenues.
Why not live within our means (like regular American families)? Congress should be examining discretionary federal spending for ways to cut waste and unnecessary spending as well as reforming entitlements such as welfare, Medicare, Medicaid, and Social Security to pay our current bills with current revenue levels instead of proposing that we balloon federal spending with new entitlements, costly projects, and freebies?
Warren’s new tax has other faults. She ignores that tax increases will lead companies to change their behavior. Does she really expect them to sit by idly and accept a whole new tax?
A new corporate tax could discourage transparency and growth among public companies. Private companies contemplating going public might just decide to remain private to avoid the public disclosures on earnings and profits which trigger this new tax.
Growing public companies may decide to cap their own growth and keep profits at or under the $100 million mark or, as Eli Lehrer at the R Street Institute surmises, they may purposefully break themselves up into smaller companies:
“The tax would also create an incentive for large, profitable companies to break themselves up into as many units as possible, thereby increasing opacity and, in turn, opportunities for corruption. All large companies consist of a profusion of legal entities reporting their results separately. Under Warren’s proposal, keeping each unit’s profits under $100 million would save a company huge amounts of money.”
With fewer public companies to invest in, regular investors who want to buy a little piece of a successful company will be left out in the cold.
Instead of coming up with soak-the-rich revenue-raising plans to fund exorbitant expansions of government spending and power, perhaps Warren and the left should adopt an approach to money most people exercise in their own lives: living within their means.