Sen. Elizabeth Warren (D-MA) has attempted to differentiate herself from the growing 2020 field by establishing herself as the policy wonk. Rallying around the slogan “I’ve got a plan for that,” Warren has courted voters with a litany of policy proposals ranging from student debt to child care. And while the proposals have yet to translate into significant polling gains, Warren has been garnering increased media attention for her ideas. In just the last week, publications like Time, The Associated Press, NPR, and GQ have all written lengthy articles about Warren’s proposals and how she is leveraging them to her advantage on the campaign trail.
Some of the plans Warren has proposed since she announced her candidacy include:
- A higher education plan that calls for canceling student loan debt and eliminating tuition at public colleges.
- A universal child care plan that would allow parents to send their children to care facilities for little or no charge.
- A plan to provide more affordable housing.
- A plan to tackle the opioid crisis.
- A plan to relieve Puerto Rico and other U.S. territories of their debt.
- A plan to provide additional financial assistance for people buying health insurance.
AR/Intel Insiders: For an in depth analysis of all Warren’s policy proposals, click here.
In addition to these proposals, Warren has co-sponsored both the Green New Deal and Medicare for All. Combined, the policies Warren is campaigning on would carry an estimated price tag of $129 trillion. Which begs the question: Does Warren have a plan to pay for these initiatives?
Her campaign would argue “yes.” In January, Warren rolled out her “ultra-millionaire” wealth tax, which would impose a 2 percent tax on household wealth in excess of $50 million, and 3 percent on wealth above $1 billion. A key aspect of the tax is that it would target all assets, not just income. In April, Warren unveiled another tax proposal, dubbed the “Real Corporate Profits Tax.” Under this law, corporate profits that exceed $100 million would be taxed at 7 percent. According to Warren’s campaign, the “ultra-millionaire” tax would generate $2.75 trillion over ten years, and the “Real Corporate Profits Tax” would generate an additional $1.05 trillion for a combined total of $3.8 trillion, falling far below the $129 trillion noted previously.
Setting aside the costs associated with the Green New Deal and Medicare for All, however, the policies specifically promoted by Warren are estimated to cost between $2.34 and $2.84 trillion,* which would fall below the revenue generated by her new taxes. There are still some issues Warren needs to address, though, and they both deal with her millionaire tax.
In February, The New York Times wrote that “there is an open debate around whether a wealth tax is constitutional.” While an income tax is authorized by the 16th Amendment, Warren’s proposal would levy a tax on the total wealth accumulated by a family or individual. Warren’s wealth tax appears to be on shaky constitutional ground, as the Supreme Court has not provided a clear answer on its legality.
There’s also an issue of enforcement. In the early 2000s, ten developed countries had a wealth tax similar to what Warren is proposing. That is now down to three. The countries that abandoned wealth taxes did so because it became difficult and time consuming to assess an individual’s “total wealth.”
The issues with enforcement and the uncertain constitutionality of the “ultra-millionaire” tax put Warren in a pickle. She has specifically noted that her wealth tax would fund her education, child care, and opioid plans. If that tax fails to materialize, she would not be able to fully fund them with her corporate profits tax alone. Add in Medicare for All and the Green New Deal, and Warren’s tax plans fall devastatingly short of funding the programs she’s touting on the campaign trail.
The Massachusetts Democrat will undoubtedly continue to roll out new government spending plans over the coming months. At a certain point, however, Warren will need to figure out if she has a serious plan to address the ballooning costs associated with these policies.
*Warren’s affordable housing plan has an estimated price tag of $500 billion but is expected to be revenue neutral because it raises the estate to 2009 levels.