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Meet the brains behind the Warren wealth tax plan

Credit: Reuters Studio
Published on December 4, 2019 - Duration: 03:49s

Meet the brains behind the Warren wealth tax plan

U.S. Senator Elizabeth Warren has been in the hot seat for targeting America's uber-rich with a wealth tax plan that has its roots in the mind of a French economist now teaching in California.

Conway G.

Gittens has a profile of Professor Gabriel Zucman.

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Meet the brains behind the Warren wealth tax plan

It's one of the pillars of Senator Elizabeth Warren's democratic run for the White House: a tax on the wealthy to pay for healthcare for all.

It's an idea championed by French economist and University of California Berkeley professor Gabriel Zucman, the intellectual force behind Warren's plan for a national wealth tax.

SOUNDBITE (ENGLISH): GABRIEL ZUCMAN, LEADING WEALTH TAX PROPONENT, SAYING: "When you look at the effective tax rate that the richest Americans pay - taking into account all taxes paid at all levels of government - for billionaires the effective tax rate is 23 percent, that is less than every other income group.

Less than the working class, less than the middle class.

They are very rich.

Their wealth has increased much more than the wealth of everybody else and they pay less taxes than everybody else." Warren read Zucman's work and later sought his advice on how to craft her own wealth tax proposal.

Unlike an income tax which taxes money earned at work, plus profits on investments and interest earned from bank accounts; the wealth tax considers a person's total net worth including homes, yachts, art, wine and all investments.

Zucman argues that too much wealth concentrated in too few hands not only creates vast income inequality but threatens the health of the economy and society.

SOUNDBITE (ENGLISH): GABRIEL ZUCMAN, LEADING WEALTH TAX PROPONENT, SAYING: "There is a point past which inequality becomes detrimental to the rest of society.

It is an idea that is deeply rooted in American society, this idea that extreme wealth concentration is corrosive for the social compact.

Of course we can have a debate about whether we are past that point or not...nobody knows." To that end, Zucman argues a wealth tax would help boost economic growth, not undercut it, as critics argue, because the money it raises would be used to help Americans at the bottom.

SOUNDBITE (ENGLISH): GABRIEL ZUCMAN, LEADING WEALTH TAX PROPONENT, SAYING: "It would collect quite a bit of revenue, about $2.6 trillion for the Warren wealth tax and that's money that can be spent on child care, that could spent on student debt relief, that could be spent on health...increasing the income that people can then save or consume and boosting aggregate demand." That fits in with Warren's campaign message: fix income inequality and get the economy working for all Americans by forcing the rich to pay a greater percentage of their wealth in taxes.

A wealth tax is also proposed by Democratic presidential contender Senator Bernie Sanders.

But it isn't loved by all Democrats running for president and Republicans downright hate it.

Skeptics point out that European countries that tried to use a wealth tax had to abandon it because it didn't work.

The rich simply moved to a neighboring country without one.

Here in the U.S., there are also legal and constitutional challenges to such a tax.

And then there are the logistics: how do you track and estimate wealth that can come from so many different sources ranging from unrealized stock market gains to artwork to real estate to royalties?

Zucman, however, believes there is momentum building in favor of more taxes on the well-to-do.

SOUNDBITE (ENGLISH): GABRIEL ZUCMAN, LEADING WEALTH TAX PROPONENT, SAYING: "When you ask people do you think that the rich pay enough in taxes, do you think big corporations pay enough?

A majority of Americans actually say, 'no.'

It's not new it something that you've seen at least of the last two decades.

There is a demand for wealth distribution." But that demand has given rise to billionaires speaking out against what they see as the vilification of their success... A pushback that's coincided with a big drop in the polls for Warren.

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