Income inequality is one of the greatest problems of our time. Senator Elizabeth Warren is offering a solution. As an early frontrunner of the 2020 presidential election race, she is proposing a 2% annual tax on the top 75,000 richest families in the nation. No assets are exempt from this, the plan would target wealth regardless of how it is made. So, while the immediate tax revenues may increase, Warren’s plan would ultimately stifle growth.
There is an important distinction between earned income and passively acquired income, and it is the latter that should be taxed. If inequality is what Senator Warren is after, it is important that she looks at what’s causing the wealth gap. Studies have indeed shown that unequal distribution of land causes extensive income inequality. Taxing land which is typically owned by the upper class and eradicating all other taxes is the best path to a wealthier and more equal America. The Senator’s proposal would ultimately slow economic growth, but a Georgist land value tax would actually promote growth, innovation, and efficiency. Another concern for Warren’s plan is the problem of tax evasion. Since land cannot be hidden, the government would have little trouble finding where taxes went uncollected. While her efforts to reduce economic inequality are commendable, Senator Warren’ plan is likely to serve more detriment to America than if nothing had changed.
* Christina Salas is a 10th Grade student. She is currently working as an intern at the Henry George School of Social Science.