Elizabeth Warren's Wealth Tax Will Brutalize Middle Class

Sen. Elizabeth Warren finally released a plan that she says will pay for her $34 trillion Medicare for All plan without raising taxes on the middle class. The only problem is that she’s more than $13 trillion short —  and features a host of tax hikes that will indeed fall on middle-class American taxpayers. Warren’s abject failure to come up with enough money to fund her plan despite reaching into middle-class Americans’ pockets is a stark reminder that these kinds of government takeovers represent an enormous threat to American taxpayers everywhere.

Warren’s plan to fund Medicare for All, which she estimates to cost just $20.5 trillion (credible studies that suggest it will be more like $34 trillion), includes policies that only the most credulous of analysts would score as “not raising taxes on the middle class.” One such policy is what’s called an “employee head tax” that, while technically paid by employers, would essentially add a flat fee on the cost to employ every single worker, no matter their salary. This means that the cost to employ low-wage workers would increase far more relative to their salary than high-wage executives. It wouldn’t increase middle-class Americans’ tax bill on April 15, but it would certainly be felt throughout the year.

And even with back-door middle-class tax increases, Warren is still far off from the $34 trillion number she likely needs to hit. Estimates put Warren’s Medicare for All-specific tax proposals at a total of $17 trillion over the next decade, just half of what would be needed to finance the $34 trillion needed to pay for such a program. Even then, Warren is not actually that close, as many of her proposals overlap with each other, such as proposed wealth tax and estate tax increases. 

Warren’s reliance on tax hikes that will ultimately burden middle-class Americans  was entirely predictable. The wealthiest Americans possess fortunes that seem huge — until compared with the amount the federal government spends. 

Warren estimates that Jeff Bezos, the wealthiest American, would pay about $6.7 billion under her expanded wealth tax proposal. That’s no small amount, but if you’re reading this after lunch, Uncle Sam has already blown through that spending today alone. Bezos’s wealth tax bill would fund the government for just over half a day. It would fund even less of Warren’s preferred federal government, which is vastly larger than today’s.

In fact, even if the federal government simply confiscated all of Bezos’s wealth, it would fund the federal government for nine days. That’s not nine days every year. It’s nine days. Once. Wealth confiscation is not a renewable source of revenue.

These numbers illustrate the folly of trying to fund the government by solely taxing the wealthiest Americans as things stand now, but Warren’s proposals would significantly increase federal spending. If Warren implemented her agenda, the time the federal government could coast on the tax bills of the wealthy would shrink even further.

Of course, there’s more than just one person in the top 1 percent. But even if you took every single penny of their wealth tomorrow, you couldn’t pay for Medicare for All for a single decade. The wealthiest 1 percent of Americans hold roughly $25 trillion. 

Put simply, when Warren tells you she can fund her $34 trillion Medicare for All plan by only taxing the 1 percent, she’s about $9 trillion off no matter what her plan is. And that’s before taking into account how her preferred tax base would shrink under any confiscatory tax regime.

So make no mistake: any serious plan to fund massively expensive entitlement plans will necessarily include substantial tax increases on middle-class Americans. Anyone who says otherwise just isn’t looking at the numbers.