Elizabeth Warren’s Robin Hood economics

Sen. Elizabeth Warren of Massachusetts, whose popularity is surging with Democratic voters, is building a reputation as the 2020 presidential candidate with a plan for everything. A Quinnipiac poll released last week found Warren earned the support of 28 percent of Democrats and Democratic-leaning independents, ousting former Vice President Joe Biden as the front-runner in the race for the party’s nomination. She also had the most votes in answer to the question, “Which candidate do you think has the best policy ideas?”

But Warren’s idea for how to pay for her ambitious plans, including “Medicare for All,” is drawing skepticism from across the political spectrum. She wants to institute a tax that would target not just the income of high-wealth individuals but also their total net assets.

Warren’s plan would levy a 2 percent tax each year on every dollar of a household’s net worth above $50 million and a 3 percent annual tax on assets above $1 billion. Economists advising her project the tax would bring in $2.75 trillion to the government’s coffers over 10 years. Warren has painted her proposal as modest, calling it a tax of “just 2 cents” on every dollar above $50 million.

Alan Viard, an American Enterprise Institute scholar, called the “2 cents” description misleading. Unlike income tax, which taxes only new income each year, the wealth tax would charge people year after year for the same assets. Over 10 years, the 2 percent tax becomes a 20 percent tax.

“Wealth taxes can be equivalent to extremely high-income tax rates,” Viard said. “Moreover, the wealth tax would be imposed in addition to the income tax, making total tax rates even higher.”

He and others have said the policy could have the counterproductive effect of slowing down the U.S. economy by reducing the amount the wealthy hold in investments.

Less investment in the United States leads to “a smaller capital stock, fewer factories, less new technology—so workers are less productive, and wages will be lower than they otherwise would have been,” Viard said. “In the end, then, a small part of the wealth tax burden could end up being borne by workers … because their wages are going to be lower than they otherwise would have been.”

A rival Democrat, tech entrepreneur Andrew Yang, pointed out in the Democratic debate in October that several European countries tried and subsequently rejected the policy. In 1995, 15 countries had wealth taxes. By 2019, only four—Belgium, Norway, Spain, and Switzerland—retained theirs. Meanwhile, France, Germany, Sweden, and other countries abandoned wealth taxes after finding they were difficult to implement, encouraged people to move their wealth abroad, disincentivized saving and investment, and didn’t raise the expected levels of revenue.

Joel Griffith, a researcher at The Heritage Foundation, said the candidates’ focus shouldn’t be on redistributing wealth but on figuring out how to uplift people who are struggling: “We want to create an environment that provides opportunities for all. … The answer is not taking from someone who has succeeded, taking that and redistributing that wealth around. The answer is equipping people to make a good living on their own.”

But before a wealth tax could go into effect—at the behest of Warren or fellow candidate Sen. Bernie Sanders of Vermont, who has proposed an even more aggressive strategy—the proposal would undoubtedly face a court challenge. Article I, Section 9 of the U.S. Constitution prohibits the imposition of a “direct tax” unless the tax draws equally from all states on a per-capita basis.

North Carolina congressional map rejected

A North Carolina court tossed out the state’s congressional district map ahead of next year’s elections, finding it likely violates voters’ rights by favoring Republican candidates over Democrats.

A panel of three state Superior Court judges issued a preliminary injunction Monday that prevents state officials from moving forward with congressional elections using maps drawn in 2016 because of “extreme partisan gerrymandering.” Though the injunction is temporary and the court must still rule on the merits of the case, the decision will almost certainly prevent elections next year under the current district maps.

The court urged the state General Assembly to quickly redraw the districts to avoid disrupting the upcoming elections, but it left open the possibility of delaying primaries scheduled for March 3, 2020, if needed. The General Assembly recently redrew its state legislative district maps after the court issued a similar ruling.

“Simply put, the people of our state will lose the opportunity to participate in congressional elections conducted freely and honestly to ascertain, fairly and truthfully, the will of the people” if elections proceed with the existing congressional district boundaries, the judges said.

The U.S. Supreme Court earlier this year said federal courts cannot weigh in on partisan gerrymandering but noted that state courts could do so under state election laws.

The North Carolina congressional delegation includes 10 Republicans and three Democrats. —Anne K. Walters

Former Sen. Kay Hagan dies

Kay Hagan, North Carolina’s first female Democratic U.S. senator, died Monday at her home in Greensboro, N.C., from complications of encephalitis after a three-year battle with the disease caused by a tick-borne virus. She was 66.

Hagan was born in Shelby, N.C., in 1953, the second of three children to Jeanette and Joe Ruthven. After graduating from Florida State University, she served as an intern in the Capitol Hill office of her uncle, Sen. Lawton Chiles of Florida. Hagan operated a senators-only elevator, and the internship inspired her involvement in politics. She met her husband, Chip Hagan, in law school. Hagan described herself as committed to her faith and attended First Presbyterian Church (PCUSA) in Greensboro.

She held office as a state senator for 10 years until 2008, when she mounted a U.S. Senate campaign that ousted Republican Sen. Elizabeth Dole. In 2014, Hagan lost the seat to Republican Thom Tillis. After her loss, Hagan served as a fellow at the Harvard University Institute of Politics.

Hagan’s husband, three children, father, two brothers, and five grandchildren survive her. Her stepmother, Judy Ruthven, her father’s second wife, also died on Monday after suffering a stroke a week ago. —H.P.

Congresswoman resigns over ethics scandal

Rep. Katie Hill, D-Calif., will leave Congress on Friday after resigning amid an ethics investigation and accusations of affairs with members of her staff.

The House Ethics Committee opened an inquiry into the 31-year-old freshman lawmaker’s alleged relationship with a male subordinate, which she has denied. She is the first member of Congress to face an investigation under ethics rules implemented in response to the #MeToo movement. Hill, who is openly bisexual, has admitted to a relationship with a female campaign staff member, which became known after several websites posted personal texts and compromising photos online, but that affair is not subject to congressional ethics rules.

Hill said she decided to step down “so my supporters, my family, my staff, and our community will no longer be subjected to the pain inflicted by my abusive husband and the brutality of hateful political operatives.” In a video posted online, she accused the “right-wing media and Republican opponents” of giving her estranged husband a platform to publish details of her affairs and explicit images of her. She vowed to pursue legal action.

Republicans held California’s sprawling 25th Congressional District north of Los Angeles before Hill won in the 2018 midterm election. Politicians from both parties have begun to announce their intention to seek the seat. —A.K.W.