Rich Democrat Thinks a Wealth Tax Would Be a Disaster

Larry Summers, former Treasury Secretary under Bill Clinton and the former director of Obama’s National Economic Council, thinks the wealth tax proposed by some progressive Democrats will backfire.

With such close ties to the Democratic Party, and being a Democrat himself, it is surprising to hear Summers come out against the wealth tax plans touted by progressive candidates such as Bernie Sanders and Elizabeth Warren.

Summers, reportedly worth $40 million, believes that the wealth tax policies undergoing discussion could cause a fissure within the Democratic Party.

The more moderate faction of the party wanting to close tax loopholes and raise capital gains rates, while the more progressive wing of the party wants to enact the wealth tax mentioned above.

“For progressives to invest their energy in a proposal that the Supreme Court has better than a 50% 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,” Summers said before a Peterson Institute panel on inequality in Washington D.C.

Summers also took aim at the data being used to push these wealth tax plans forward. Summers called the data “substantially inaccurate and substantially misleading.”

‘Pretty nuts’

Ron Baron, another lifelong Democrat, is inclined to agree with Summers.

Baron is the founder of Baron Capital, an investment management firm with an estimated $26 billion in assets under management.

Talking about Warren’s wealth tax plan specifically, Baron said, “I don’t think Elizabeth Warren would be successful … if she were chosen president in getting through the policies that she’s proposing.”

Baron, still talking about the proposed wealth tax plan, went on to say, “It’s pretty nuts.”

Under Warren’s plan, a 2% tax would be enacted on families’ net worth of above $50 million and a 3% tax on household net worth over $1 billion.

Instead of a wealth tax, Baron suggested that the progressive Democratic candidates adopt a value-added tax plan.

Under a value-added tax plan, the tax is placed on goods and services during each phase of production and sale. Such a tax would be spread across all income levels of the economy, since it would raise the price of nearly any consumer purchase.

“Warren says if you’re successful because this country has allowed you to be successful then you shouldn’t be as successful as you are,” Baron said.

Bitcoin and Gold Slaying Stocks: Why Not Own Both?

The Bitcoin vs. gold battle rages on as the two are best-performing assets of 2020. The price of gold is up 26% this year, while Bitcoin has soared 87% —

Companies Pile On Debt. Big Headaches Later for Investors?

How have companies handled the cash crunch during this pandemic? I came across an insightful in-depth research report this past week that had a few interesting charts on this. See

Potential Options Payoff in Post-Covid China Rebound

The Chinese economy is starting to show signs that it is rebounding better than other economies around the world. China was the first country that had to battle the COVID-19

Retirement Income Tip: Buy High-Yielding Dividend Stocks

Imagine a scenario where you can make money while you sleep. Sounds too good to be true, right? Enter high-yielding dividend stocks. Now, there are lots of stocks in the

Beat the S&P 500 with These Specific Stocks

Today I'm going to briefly discuss a major error that most stock market participants make on a regular basis and ways in which you can substantially increase your stock returns.

Iaccino: Dollar Down, Stocks Higher, Plus PayPal Meets Bitcoin

A renewal of federal stimulus on top of monetary stimulus after the election is likely to support the stock market, says Bob Iaccino, editor of the Stock Think Tank. The

investor or pay off debt

Invest or Pay Off Debt? In a Pandemic, I’m a Stock Buyer

If you were to tell someone that you were putting any extra cash you had into the market instead of paying off debt, they might think you have lost your

bitcoin mass adoption

Bitcoin Mass Adoption Can’t Be Far Off — That Means Surging Demand

When you look at past technological developments — from the 19th century industrial revolution through the introduction of the telephone, personal computers, Internet, and smartphones — there is a typical

stocks overvalued

Is the Stock Market Overvalued? Not By This Measure

You many have heard the term “TINA” mentioned in various financial and investment commentaries in recent months. This is an acronym for “There is No Alternative.” It is built around a

clx options

Options Play: Take Advantage of Bearish Sentiment On Clorox (CLX)

We are in the middle of a global pandemic and one of the best weapons against the virus is cleaning surfaces with bleach. If we were to ask 100 people

This Predicts Bitcoin Price — and It’s Uncannily Accurate

Many investment advisors are beginning to recommend some exposure to Bitcoin (BTC) and some alternative (alt) coins, such as Ethereum (ETH). But the biggest hurdle for many analysts is how

retail spending

Retail Spending Shoots Higher, Suggesting Stocks Will Follow

Data released today by the U.S. Department of Commerce indicate that sales at U.S. retail stores rose sharply during September. Specifically, that data indicate that U.S. retail stores rose during