Democrats Elizabeth Warren and Alexandria Ocasio-Cortez have proposed plans to increase tax rates for America’s top earners. However both ideas could ultimately “devastate” middle-class prosperity, according to former Bain Capital managing director Ed Conard.
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“I don’t think the Democrats care,” Conard told FOX Business’ Stuart Varney on Friday. “I think they care about taking that money to help the poor. I don’t think they care about generating middle-class prosperity.”
Massachusetts Democratic Sen. Elizabeth Warren contender for the 2020 presidential election, proposed a plan that would levy a 2 percent annual tax on Americans with a net worth over $50 million. The tax rate would also increase to 3 percent for those with assets valued at more than $1 billion. In Conard’s opinion, the notion would only create more wealth inequality.
“I think the one way to think about that is on average capital produces about a 5 percent return. So if you tax it 2 percent you’re talking about a 40 percent tax on the income,” he said. “We already have a 20 to 30 percent tax on capital gains. You’re talking about extending the 70 percent from labor income to capital income.”
What’s more, it would stifle innovation, he added.
“You have a bunch of people in Silicon Valley who are trying to get rich so they don’t have to work,” he said. “If you take away their incentive to get rich by taking all that money away from them—all the value of that money—what incentive do they have to try to take the risk that produce the innovation that grow the economy?”
Warren’s proposal is different from self-described Democrat socialist and rising star of the party, Ocasio Cortez, who floated a 70 percent income tax rate on incomes above $10 million to fund a new green energy plan. In Conard’s opinion, the plan would “gradually” depreciate middle class incomes.
“I think our middle class incomes end up like Europe’s—15 to 30 percent below where ours are today,” he said.
A majority of voters favor increasing tax rates for the wealthy, the latest Fox News poll revealed.