Belpointe chief market strategist David Nelson and Forbes Media Chairman Steve Forbes discussed the impact of Sen. Warren's proposed wealth tax on the economy and the market with FOX Business' "Mornings with Maria" Thursday.
Forbes argued that big tax increases will "whack this recovering economy."
David Nelson: " This is not a new concept that's been tried by several countries. They've repealed it. Look, I'll be the first to admit the current tax code is 77 thousand pages long and needs revamping. Most of those pages are dedicated on how to avoid paying taxes in the first place. But go after the low hanging fruit, go after things like carried interest, go after things like the 1031 exchange where you can avoid paying taxes for a lifetime. At some point, we're going to have a conversation on taxing capital the same as income. But this is not it. It will not work. There's no market price. There's no market price for private business. And what happens if you pay a tax and an unrealized gain that turns into a loss, [are you] going to get the money back? I doubt it. It's already spent."
Steve Forbes: "What David said is a good argument for the simple flat tax, but this array of taxes, I'm surprised the market has held up as much as it has. Big tax increases are going to come. That's the consensus now, that's going to whack this recovering economy. So you have that. And, David too, how do we finance these gargantuan deficits without a return of inflation? How do we avoid stagflation, stagnation of the economy, inflation? You're hurting the economy. You're printing a lot of money. Why is the market still floating like this?"
David Nelson: "What I think Steve is saying is very true. Inflation is here. It's everywhere. It's at the pumps. Look at the PMIs around the world, they are rising. We have bottlenecks around the world. This flood of capital at this point is only going to drive inflation higher. The Fed can talk a great game, but the markets aren't buying that. We've seen 10-year yields continue to move and at some point that becomes an investable asset class. At some point you're going to have to pay for that. And equity holders of equity will start to move into other asset classes, and they already see it in commodities at all-time highs. For many of them, energy continues to rise. That translates into inflation in the United States. And I think the Federal Reserve at some point is going to have to defend the dual mandate."