“I have a plan!,” says Senator Elizabeth Warren.
Yes, she does. Universal health care (“Medicare for All”); free college-level education; revamping the military, our foreign policy, immigration; charging a wealth tax; massive changes in our policies to fight the global climate emergency; agricultural program reforms; anti-poverty programs; and many more plans can be found on her web site, https://elizabethwarren.com/plans.
Although these proposals have attracted a lot of support among Millennials and others who deem themselves to be progressives and liberals, there are two programs, in particular, which will doom the Warren Presidential candidacy. These programs are interrelated, and they will not work.
Medicare for All
Medicare for All, legislation originated and authored by Sen. Bernie Sanders, reflects the belief that a fundamental human right is to have health care, universally available to all of us. Medical costs in America are outrageous. Big Pharma, the explosion in personal injury lawsuits, and the large number of doctors who are charging more than ever before to cover their rising insurance premiums, have made accessing medical care an extraordinarily-costly and complex process, daunting to many people.
The amount of paperwork, the duplication or more of procedures deemed necessary to reduce the risk of being sued for medical malpractice, are viewed as necessary evils by health care providers. For those involved in the legal profession, the quantity of paperwork produced in a simple, garden-variety automobile versus automobile accident is astonishing. Bad lawyers can consume half an inch of papers in pleadings and Discovery; good lawyers can quintuple that amount.
Someone wise once said: “Money isn’t everything — but the lack of it is.” To an impoverished single mother whose child is sick, that phrase is tattooed to the inside of her eyelids.
A broken arm — an affliction from which young children sometime suffer — can be an unfortunate rite of passage in childhood. But it can also cost upwards of $10,000, $15,000, or even $20,000, figures which could bankrupt a single mom working two jobs to try to make ends meet.
Imagine the emotional and financial crisis of being a parent of a child with a chronic illness, requiring prolonged stays in the hospital, and with pharmaceuticals costing $100,000, $200,000 or more per year.
The message in this country is simple:
“If you’re wealthy and sick, get the best care that money can buy. If you’re poor and sick, well, just lay down and die!”
So, many caring, empathetic people feel that the monumental burdens of the miserable poor need massive changes in our health care system. The value of a program such as Medicare for All is that it seems to provide a means of addressing that fundamental need for health care.
On November 1, Sen. Warren released her cost figures: $20.5 trillion for the plan.
With that budget item, the fundamental question remains:
Who will pay for it?
The Wealth Tax
During the last Presidential debate, Senator Warren was palpably vague when she was asked about the payment for Medicare for all. She hemmed and hawed, and did not provide her normal barrage of specific details. Essentially, she shouted out a goal before having a coherent strategy for its achievement.
Mayor Pete Buttigieg noted: “I have great respect for Senator Warren, but she has not come up with any dollars and cents for this proposal, and she hasn’t addressed the fact that many people prefer to keep their private health care plans. Instead, why don’t we consider my program, which is Medicare-for-all-who-want-it?”
Mayor Pete’s program would cost somewhere around $1.5 trillion. He would pay for it by reversing the tax cuts given to the wealthy and corporations in 2017. His figure is still a lot, but more than 10 times less expensive than Warren’s proposal. To boot, it would not necessarily incur the wrath of the private health insurance companies, nor the Chamber of Commerce which launders a lot of their money, nor the AMA, nor the American Hospital Association, nor Big Pharma.
But the real question, once again, is who will pay for Medicare for All?
Sen. Warren states:
“It’s simple. We’ll have a two cent [two percent] Wealth Tax” imposed on billionaires like Jeff Bezos, Mark Zuckerberg, Bill Gates, Warren Buffet, and Leon Cooperman, to name but a few.
Sen. Warren believes that with such a wealth tax she’ll be able to fund Medicare for All without increasing taxes on the Middle Class. She also proposes to increase taxes on employers. (Of course, that’s a head tax, and it will be indirectly passed on to Middle Class wage earners, but that’s another story….)
The assumptions of Sen. Warren’s Wealth Tax are:
- There will be coherent and consistent ways of measuring wealth;
- There will be honest reporting of wealth;
- There will be legal means necessary to “capture” a portion of wealth;
- There will not be loopholes designed to evade wealth taxation; and
- There will be strong incentives for the wealthy to cooperate in a wealth tax scheme.
Ways of Measuring Wealth
Many people would say that measuring wealth is pretty straightforward: How much money do you have in the bank? Are you in the stock and/or bond market? How much are your stocks and/or bonds worth? How much real estate do you own? Do you own a business? If so, how much is it worth? Do you own patents, copyrights, and/or trademarks? What are they worth? Are you the beneficiary of a trust or a family limited partnership?
Armies of bookkeepers, accountants, tax specialists, and lawyers could be kept busy for a long time determining the value of wealth. Due to the complexity of our legal and accounting systems, value determination would not be an easy task.
Honest Reporting of Wealth
Assets minus liabilities equals net worth, also known as wealth. The problem is that wealthy people around the world often use shell corporations or other legal entities in offshore jurisdictions with no taxation and with extremely restrictive reporting requirements to shield disclosure of their wealth. Asset protection programs can be used in multiple locales to prevent investigators in the U.S. from finding out who (or what) owns what. Getting the owners of such accounts to honestly account for and report the true value of their assets to the IRS is essentially a fool’s errand; it won’t work, so long as there are asset- and tax-havens around the world that allow for the parking of money for a price.
Legal Means Necessary to Capture a Portion of Wealth
In the U.S. it might conceivably be possible for tax authorities to seize assets, if necessary, to enforce a wealth-tax. But the problem is that many assets are offshore and can be kept out of the reach of tax collectors who lack jurisdiction over those countries where the assets are squirreled away.
No Loopholes for Wealth-tax Evasion
A country can have iron-clad laws without exemptions to preclude collection of a wealth-tax. The problem, once again, is that there are tax- and asset-havens around the world that do not report to the United States, and who do not publish the ownership of assets. Imagine, then, that Al Capone was able to open up accounts in the Guernsey Isles, or in the Cayman Islands, Turks and Caicos, or the Cook Islands. He would not have died in jail for tax evasion, because his bookkeepers, accountants and lawyers would have been able to shield him from disclosures that led to his conviction.
Strong Incentives for the Wealthy to Cooperate in a Wealth-tax Scheme
Taxation of the wealthy is not always going to be met with pitchforks and torches. Some very wealthy people — billionaires, for example — have done some marvelous things with their money. Leon Cooperman has given a lot for education, medical research, and Jewish charities. The Bill and Melinda Gates Foundation has been extraordinarily generous in projects in Africa and elsewhere around the world, funding programs to improve health, education, gender equality, and poverty-alleviation. The John D. and Catherine T. MacArthur Foundation fights against the causes of the global climate emergency, seeks nuclear nonproliferation, supports local justice initiatives, and provides arts and technology support. The list goes on and on.
In many instances among the wealthy, self-aggrandizement gives way to an understanding that giving back to the community is a far more fulfilling part of one’s life, and is really one’s true life purpose. Unfortunately, there are some wealthy people whose thirst for “more-more-more” is never slaked. Sometimes they can be convinced to give by infusing their donation with a big ego-boost: naming a building after them, or a Chair at a prestigious university, for example. The donation of, say, $50 million or $100 million to construct a new building for a medical center sounds wonderful — but then you realize that that contribution is marked against net wealth of $10 billion or more, amounting to literally 1 ¢ on the dollar.
If appealing to their ego is the key to getting the wealthy to pay a tax, okay, but is Elizabeth Warren doing that?
No. Instead, she’s bashing them; telling them that she’s going to break up their companies and bring everything they’ve worked for to a crashing halt. The high-tech companies she’s challenging (Facebook, Amazon, Google, et al.) have created over 120,000 jobs in the last quarter. Does she really want to bring that job creation process to a stop?
And if she wants Jeff Bezos/Amazon, Jack Dorsey/Twitter, Mark Zuckberg/Facebook, Larry Page/Alphabet (parent of Google), and others to head up a revolt against her, she can keep ranting about their need to stop their wrongdoing (in her eyes) and do everything she can to make their lives miserable.
Or, she can recognize that
People Act in Accordance With How They’re Incentivized
If you want Zuckerberg and Bezos and Dorsey and Page and all the others in their coterie of high net-worth people to do what’s right, work with them. Challenge them to join in a massive, let’s-make-America-thrive program. Get them to come up with responses to the issues of the environmental crisis; the homelessness crisis; the health care crisis; the poverty crisis; the education crisis; and the infrastructure crisis. With their brains, organizational talents, and motivational skills, they might just be the solution, not the problem.
If they are incentivized by getting positive support for what they are doing to make this a better society, and not about the bright, shiny toys for us to play with, this could be a path for us to achieve what needs to be done to make this a country of which we can be proud.
To the contrary, if Sen. Warren continues to browbeat them and threaten to destroy their “babies,” as she apparently wants to do, she should not be at all surprised by the news that her ship has truly sunk….