Reply to Turns Out Americans Actually Do Want to Tax the Rich

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[quote=Anonymous]It's a dumb idea, if for no other reason than the administrative problems involved. 
Essentially - she wants to tax assets, not income.

[quote]The Problems with Warren’s Solution

Instead of fixing the income tax system that we already have, Senator Warren’s proposal would leave our broken income tax in place while layering on an entirely new and unwieldy wealth tax regime. There are two reasons why this decision is unwise.

First, a wealth tax would be an administrative nightmare. It would require us to calculate the value of a household’s assets year in and year out — which may be easy for publicly traded stocks with daily price quotes, but is much harder for illiquid assets like real estate or stakes in privately held companies. For example, how much are shares in the ride-sharing service Lyft worth? The company’s underwriters value the company at somewhere between $18 billion and $30 billion — a rather wide range. With other assets like fine art (remember, we’re talking about the super-rich here), valuations are even less certain: works sometimes sell at auction for less than their pre-sale estimates and sometimes for fourfold more.

Warren says that she would ensure proper enforcement of her wealth tax by hiring more IRS employees and conducting more audits. But valuation problems won’t be solved by more manpower. In many instances, there is no one “right” answer to the question of how much an asset is worth, no matter how many people we throw at the problem. Wealthy taxpayers will likely pick a low-end figure, and it will be impossible for the IRS to prove that they are wrong.

Second, even if Warren’s proposal passes Congress, there is a good chance it will be struck down by the courts. The Constitution says that “direct taxes” must be apportioned among the states on the basis of population. In other words, if 12% of the population lives in California, then only 12% of revenues from a “direct tax” can be raised from California — no more, no less. Warren’s proposal would generate more revenue per capita from richer states like Maryland and New Jersey than from poorer states like Mississippi and West Virginia, so it would clearly flunk the apportionment test.[/quote]

http://time.com/5516903/elizabeth-warren-wealth-tax-income-assets/[/quote]

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