Democratic presidential candidate Andrew Yang took to Twitter Friday to address the wealth tax proposed by fellow candidates Bernie Sanders and Elizabeth Warren. The 44-year-old serial entrepreneur suggests that, while he understands the “spirit and appeal” of the tax, he doesn’t believe it would work as it is intended.
“It makes sense that those who enjoy vast fortunes should pay back into the system, particularly given the concentrations of wealth in our winner-take-all economy,” he tweeted. “But the implementation would be impractical and problematic.”
According to Yang, there are many cases where assets are hard to value, such as goodwill, intellectual property, speculative investments, and illiquid family businesses. He also claims that many of the most wealthy would find ways to avoid an inventory of their assets.
“This would include even adjusting their marital status and/or legal guardianship to divide assets among family members to fall below taxable thresholds,” he said, adding that he believes a wealth tax would also lead to capital flight by pushing wealthy Americans to become citizens in other countries.
Yang ended by touching on his proposal of a value-added tax (VAT) to tax those who “benefit most from and consume the most” in U.S. society. In particular, his campaign proposes a VAT catered to siphoning money from companies that benefit the most from automation, such as Amazon, Google, and Facebook. The money would go toward his campaign’s signature proposal — a universal basic income (UBI) of $1,000 per month for every American adult.
2020 hopeful @AndrewYang says he will continue to gain support of his unconventional campaign because he addresses “problems that Americans see around them everyday.”
— The View (@TheView) September 26, 2019
American macroeconomist N. Gregory Mankiw wrote a piece for The New York Times on Friday that compared Warren’s wealth tax to Yang’s VAT proposal and suggested that the latter is more practical. Although Mankiw acknowledged the appeal of a new tax on millionaires and billionaires, he highlighted the difficulty that would stem from determining how much the wealthy owe, pointing to the forms of wealth with “no market valuation,” echoing Yang’s sentiments.
Mankiw added that a VAT would be a much more feasible proposal.
“Value-added taxes, which are essentially sales taxes, have proven remarkably efficient in many European countries. And the universality of the dividend would make it simple to administer.”
Others, such as Sanders, believe that a wealth tax is necessary to reverse the growing income inequality in the United States and prevent the country from turning into a “corrupt oligarchy.”
Per KPTV, Sanders plans to impose a 1 percent tax on married couples making over $32 million. This rate would increase to 2 percent on net worth between $50 million and $250 million and continue climbing in predetermined increments up to a maximum of 8 percent on wealth above $10 billion.