Tax the Warrens

                                             

Senator Warren and Spouse

Even before the first Democratic debate last Spring, I believed that Senator Elizabeth Warren of Massachusetts would be the strongest candidate in the large field of Democratic contenders. She shows maturity and at age 70 does not appear over the hill like former Vice President Joe Biden or Senator Bernie Sanders of Vermont, the other two candidates leading in the polls.  

Of course, the fact that Warren is a woman is a big plus in modern politics but her maturity inspires more confidence than other female candidates like Kamela Harris or Tulsi Gabbard who are both fading in the polls. Nevertheless, currently only 20% of potential Democratic voters support her. Could it be that even Democratic voters are skeptical of her proposals to tax the rich to pay for free everything for everyone else? 

The assets of Senator Warren and her husband, a long time Harvard Law professor, would appear to total more than $10 million. They own a home in Cambridge valued at around $3 Million, and a condo in D.C. worth about $800000. However, most of their assets seem to be in retirement accounts. They both have accounts with the Teachers Insurance and Annuity company with a combined value of about $4 Million.  

Ironically, these accounts are in 403b or defined contribution tax-deferred plans that left-wing Democratic leaders and public employee unions decry as inherently risky and dangerous since they are usually invested in a broad cross section of the American economy and are subject to market fluctuations. Nevertheless, most college professors and administrators have most of their retirement assets in such accounts that have performed well over the years.

 Perhaps this is why Senator Warren calls herself a Capitalist. Moreover, in true Capitalist fashion the she and her husband have chosen to shield their assets from taxation. Not only are their retirement contributions not considered taxable income each year, but the build-up in value is not taxed until they choose to make withdrawals in retirement.  In addition, the capital appreciation on their Cambridge home and Washington D.C. condo is not taxed until they choose to sell them. 

Why did they choose to defer the taxes on their earned income? Can they be blamed for not paying their fair share? I suspect that their reasons were the same as anyone’s. They were willing to save a portion of their income each year to provide for their retirement. They chose to do without the income to make sure that they would be comfortable in retirement. The government even encouraged them to do so by providing tax incentives to these plans. Who can blame them for taking advantage of the opportunity?

It is true that Warren and her husband are not billionaires, and Senator Warren is only planning to place a sur-tax on billionaires. Perhaps she and other Progressives think that billionaires have more than they need but does she and her husband really need $4 million in the stock market or a $3 Million home for a comfortable retirement? 

It will not be long before Progressives start coming after millionaires like Senator Warren. Socialist Bernie Sanders hopes to tax billionaires out of existence in fifteen years. Who will then to left to pay taxes? The wealth re-distribution proposals put forward by Senator Warren and Senator Sanders are real examples of killing the goose that laid the golden egg. 

According to government statistics, in 2016 the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent paid roughly $538 billion, or 37.3 percent of all income taxes, while the bottom 90 percent paid about $440 billion or 30.6 percent of all income taxes. 

It is hard to say how long the economic boom caused by the income tax reform sponsored by President Trump and the Republican party will last. But for now the country is enjoying record levels of income, productivity and unemployment. Of course, Democrats like Senator Warren cannot acknowledge such achievements despite the fact that her retirement accounts have probably grown dramatically in the past three years. 

In the words of the immortal Shakespeare, “Methinks the lady doth protest too much.”

###