“I don’t think that taxation approaching confiscatory is remotely feasible and, if it was tried, would have catastrophic economic consequences,” Summers, a former president of Harvard University, told CNBC.
Summers, who also was a former director of the National Economic Council under President Barack Obama, was the latest Democrat to express skepticism over proposals pushed by more progressive elements in the party.
“Essentially, what Sen. Warren’s plans would do, as I read them, is they go through every option that has been selected as the possible strategy for raising progressivity and tries to do them all of them at once,” Summers said. “And when you try to do all of them at once, you’re collecting essentially about as much taxes as the total after-tax AGI, adjusted gross income, of all the millionaires.”
Warren, D-Mass., previously proposed a two percent tax on wealth above $50 million as well as a three percent tax on wealth that surpassed $1 billion. That later changed to six percent after Warren faced questions over how she would pay for her “Medicare-for-all” plan — a massive proposal that conservatives have warned would cost too much and burden the economy.
According to The Wall Street Journal, the rates could vary and make 100 percent tax rates “typical” for investment income.
Summers previously bashed the idea of a wealth tax, arguing in October that Congress and the Supreme Court would likely reject it.
“For progressives to invest their energy in a proposal that the Supreme Court has better than a 50 percent chance of declaring unconstitutional, that has very little chance of passing through the Congress, whose revenue potential is extraordinarily in doubt — for that to be the defining element in the progressive agenda in the United States, it seems to me to potentially sacrifice an immense opportunity,” he said.
Warren, however, maintains that she can pay for her health plan without raising middle-class taxes. On her website, she claims that her all her tax changes would generate trillions of dollars in revenue over the next decade.
“We can raise another $3 trillion over ten years by asking the top 1 percent of households in America to pay a little more,” she said. Overall, she projects the cost will total just under $52 trillion.